Loan-to-value (LTV)
The loan amount divided by the property's value or price, whichever is lower, as a percentage. Lower LTV means less risk for the lender and often better pricing; above 80% usually triggers mortgage insurance on conventional loans.
Also called: LTV, loan to value ratio, LTV ratio
Related terms
The part of the purchase price you pay in cash rather than borrow. A larger down payment lowers the loan amount and can remove the need for mortgage insurance on a conventional loan.
Insurance that protects the lender on a conventional loan when the down payment is under 20%. The borrower pays for it, usually monthly. It can be removed once equity reaches set levels, and ends automatically at 78% of the original value.
The value the appraiser puts on the home in the report. Lenders base the loan on the lower of this number and the purchase price.
The part of a property's value you own outright: its market value minus what you owe on loans against it. Equity grows as you pay down the loan and as the property gains value.
A refinance where the new loan is larger than what you owe, and you receive the difference in cash. It turns home equity into money but raises your balance and resets the loan.