(LTV)

Loan-To-Value Ratio (LTV)

Investor Term:

LTV

Definition:

Loan-to-value ratio (LTV) is a financial ratio that measures the amount of debt a borrower has relative to the value of the asset they are borrowing against. It is calculated by dividing the loan amount by the appraised value of the asset.

Formula:

LTV = Loan Amount / Appraised Value of Asset

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Example:

For example, if a borrower takes out a loan of $100,000 to buy a house that is appraised at $200,000, then their LTV would be 50%.