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What is a loan-to-value ratio and how does it relate to my costs?

The loan-to-value (LTV) ratio is a measure comparing the amount of your mortgage with the appraised value of the property. The higher your down payment, the lower your LTV ratio.

Mortgage lenders may use the LTV in deciding whether to lend to you and to determine if they will require private mortgage insurance. If you have to get private mortgage insurance, it will increase your monthly costs. Be sure to compare the amounts, terms and costs of several loans, including the cost of mortgage insurance if it will be required.

Tip: Learn how mortgage rules may help you when you shop for a mortgage.