Loan-to-Value (LTV) Calculator

LTV is the share of the property the lender is financing. Put $80,000 down on a $400,000 house and you borrow $320,000, an 80 percent ratio with 20 percent equity. The lender reads that equity as its cushion: if the loan fails, the foreclosure sale has to cover the balance plus costs, and a thick equity layer absorbs a price drop before the lender loses anything. The less of the house you own, the more risk the lender carries, and the more it charges for carrying it.

Say you buy at $350,000 with 10 percent down. The loan is $315,000, so you start at 90 percent LTV, and PMI applies until the ratio reaches 80. At a typical 0.5 percent annual PMI rate, that is about $131 a month on top of a principal and interest payment near $1,991 at 6.5 percent over 30 years. Reaching 80 percent of the original value means paying the balance down to $280,000. On the regular schedule that takes about eight years, more than $12,000 of PMI at $131 a month. Add $200 a month toward principal and the milestone arrives in just over five years instead, which trims nearly three years of PMI, roughly $4,400, and cuts the lifetime interest bill on top of it. Appreciation can shortcut the wait. If the home gains 3 percent a year, after three years it is worth about $382,000 while the balance has fallen near $303,700, putting LTV around 79 percent on current value. That clears the 80 percent line, but servicers following Fannie Mae rules generally want 75 percent when a loan is between two and five years old, so an early value-based cancellation usually needs stronger appreciation or extra principal behind it.

Federal law sets the floor on PMI removal for conventional loans, and knowing it is worth real money. You can request cancellation in writing once the balance reaches 80 percent of the home's original value, provided payments are current, and the servicer must cancel on its own at 78 percent based on the original amortization schedule. Neither protection depends on the home gaining value. If it has gained value, you can ask sooner. The servicer will usually require a new appraisal at your expense, typically $400 to $600, and may apply the seasoning rules described in the example above. A recent late payment can stall the request until your record is clean again, so time the ask accordingly. FHA loans sit outside these rules entirely; refinancing into a conventional loan once you hold 20 percent equity is the standard exit there. The CFPB's Ask CFPB pages on mortgage insurance cover the cancellation rules and what to do when a servicer drags its feet.

The price of a high ratio goes beyond the interest rate. Above 80 percent on a conventional loan, PMI runs roughly 0.3 to 1.5 percent of the balance per year depending on credit score and the exact ratio. Fannie Mae and Freddie Mac then apply loan-level price adjustments that step up as LTV climbs, folded into the rate or charged as points at closing. The bands below are how lenders tend to see the spectrum.

LTV counts the first mortgage only. Combined loan-to-value adds every lien: a $300,000 first mortgage plus a $50,000 HELOC on a $400,000 home is 75 percent LTV but 87.5 percent CLTV. The distinction matters the moment you borrow against equity, because home equity lenders underwrite to CLTV and most cap it between 85 and 90 percent. A homeowner with a low first-lien ratio can still be maxed out on borrowing power once the second lien is counted.

The value in your head is not the value in the ratio. Lenders use the appraisal, and when it comes in below the contract price on a purchase, the difference lands on you: more cash at closing, a renegotiated price, or PMI you had not budgeted. On a refinance, a short appraisal can push you back over 80 percent and take a cash-out off the table. You can push back. Request a reconsideration of value and supply recent comparable sales the appraiser missed, since a documented error is the strongest case for a revision. A second appraisal is sometimes an option, though the lender chooses whether to rely on it. When the number will not move, extra principal is the dependable route back under a threshold. The CFPB's home buying guide explains what appraisals cover and how the reconsideration process works.