Loan-to-Value (LTV)

Loan-to-Value (LTV) – The ratio of loan amount to value of property a lender is willing to lend.

  • Example: When you purchase your home, you need to be careful about the price you pay because your lender will not lend you the full purchase price to get the home. They will lend you only a portion of the value of the home as determined by a loan-to-value ratio. If a property worth $100,000 on an appraisal, which sold for a $125,000 purchase price and the lender will fund an 80% loan-to-value means they will lend $80,000 and the buyer must pay the other $45,000.
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