What Loan-to-value ratio (LTV) means
Purchase LTV usually compares the original loan with the lesser of price or appraised value. Current LTV compares the remaining balance with a current value estimate. Refinance LTV uses the new loan and lender-accepted value.
Label the date and source of value. An old appraisal can make a precise-looking LTV misleading.
Do not confuse LTV with loan-to-cost, which compares financing with acquisition and project cost.
LTV example
- Loan amount: $180,000
- Supported property value: $240,000
Result: $180,000 / $240,000 = 75% LTV.
When investors use it
- Comparing leverage across deals
- Estimating equity cushion
- Planning a refinance
- Checking lender constraints alongside DSCR
Common mistakes
- Using ARV as if it were current value
- Ignoring a second lien
- Mixing original loan amount with current property value
- Treating low LTV as proof that the property cash flows
Frequently asked questions
Is down-payment percentage the opposite of LTV?
At a simple purchase with no additional financing, 20% down corresponds to 80% LTV. Closing costs, seller financing, and value differences can make the full capital stack more complicated.
Does a higher appraisal automatically allow a larger loan?
Not necessarily. Lenders may cap proceeds using purchase price, DSCR, borrower qualifications, loan purpose, or program limits in addition to LTV.
What is combined LTV?
Combined LTV includes the balances of multiple loans secured by the property divided by its value.
This guide is educational and does not provide investment, lending, tax, legal, or appraisal advice. Verify inputs and requirements for the specific property, lender, and jurisdiction.
Put the metric inside a complete deal.
PropLurk keeps acquisition inputs, financing, expenses, returns, and the decision record together.