LOAN-TO-VALUE RATIO - LTV RATIO
A lending risk assessment ratio used by financial institutions and lenders before approving a mortgage. Usually, high loan-to-value (LTV) ratios are seen as higher risk. Therefore, if the mortgage is accepted, it will cost the borrower more to borrow should he or she need to buy mortgage insurance. To compute LTV, divide the mortgage amount by the appraised property value. Bankers normally require a maximum of 75% ratio in order for a mortgage to be approved.
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