# Loan-to-Value Ratio (LTV)

*Borrowing & Credit — Finicade finance glossary*

Loan-to-value is the loan amount divided by the asset's value — how much of the purchase the lender is funding. At 80% LTV you have a 20% deposit, which is the threshold where US mortgage insurance usually falls away and rates improve. Lenders price in LTV bands, so crossing from 81% to 79% can cut your rate meaningfully. In a falling market LTV rises without you doing anything, which is how borrowers end up underwater.

**Formula:** `LTV = Loan amount ÷ Appraised value`

**Also known as:** LTV, loan to value

**Related terms:** [Mortgage](https://finicade.com/glossary/mortgage), [Home Equity](https://finicade.com/glossary/home-equity), [Collateral](https://finicade.com/glossary/collateral), [Private Mortgage Insurance (PMI)](https://finicade.com/glossary/pmi), [Debt-to-Income Ratio (DTI)](https://finicade.com/glossary/debt-to-income-ratio)

Source: https://finicade.com/glossary/loan-to-value-ratio