Frequently Asked Questions
An LTV ratio over 80% is generally considered high by lenders. While loans with high LTVs are available, they often come with higher interest rates and may require mandatory private mortgage insurance (PMI) to protect the lender from potential loss in case of a default.
Some specialized loan programs, such as VA or USDA loans, may allow for a 100% LTV, meaning you do not have to make a down payment. However, these are typically limited to specific borrowers or geographical areas.
The appraised value is the independent, professional valuation of the property’s worth. It is not necessarily the same as the home’s purchase price. Lenders use the appraised value to ensure the loan amount is not disproportionate to the asset’s true market worth.
Yes. A higher LTV means you are borrowing a larger percentage of the property’s value and thus putting less of your own money down. This can be beneficial if you have limited savings, but it also carries a higher risk and cost.
The opposite of the LTV ratio is the loan-to-cost (LTC) ratio, which is used more for construction loans and compares the loan amount to the total cost of the project rather than just its appraised value.
