80% and 75% are different products; 80.5% and 80% are very different prices
A $240,000 loan on a $300,000 property is 80% LTV with $60,000 of equity. Lenders price in bands — commonly 60%, 75%, 80%, 85%, 90%, 95% — and the rate steps down at each threshold rather than improving smoothly. Landing at 80.5% is priced as the 85% band, so the last half-point costs a full step.
LTV = loan / property value x 100; max loan = property value x target LTV / 100
That makes the arithmetic worth doing before applying. Finding another $1,500 of deposit to cross from 80.5% to 80% can be worth far more over the term than the $1,500 itself, and it is one of the few points in a mortgage application where a small sum has a disproportionate effect.
At 80% on a $300,000 valuation, the maximum loan is $240,000
The mode toggle reverses the calculation. Given a valuation and a target LTV, the maximum loan is simply the valuation multiplied by the LTV. That is the figure to work from when you know which band you want to be in and need to establish how much deposit it requires.
It is also how remortgage decisions are usually framed. A property that has appreciated since purchase may now sit in a lower LTV band at the same outstanding balance, which can unlock a better rate with no repayment at all — worth checking whenever local prices have moved.
A down valuation raises LTV without anything else changing
LTV is computed against the lender’s own valuation or the purchase price, usually whichever is lower. A property agreed at $300,000 but valued at $285,000 produces an LTV of 84% rather than 80% on the same loan, which can move the application into a worse band or fail it outright.
The usual responses are to increase the deposit to restore the band, renegotiate the price toward the valuation, or challenge the valuation with comparable evidence. None is pleasant, and all of them are easier if the original LTV had some margin rather than sitting exactly on a threshold.
Affordability, and the second charge behind it
LTV measures the loan against the asset; it says nothing about whether you can afford the payments. Lenders apply a debt-to-income test alongside it, and a strong LTV with weak affordability fails just as surely as the reverse.
Where a second charge exists — a home equity loan or line — lenders look at combined LTV across both, which is what constrains further borrowing. A first mortgage at 60% LTV with a second charge taking the combined figure to 88% is priced as an 88% position, not a 60% one.
Frequently Asked Questions
What is a good loan-to-value ratio?
Lower is generally safer and cheaper. Many lenders reserve their best rates for 80% LTV or below, and an LTV at or under 80% often avoids mortgage insurance. Higher LTVs are possible but usually cost more and carry stricter conditions.
What is the difference between LTV and equity?
They are two sides of the same coin. LTV is the borrowed share of the value; equity is the share you own. They add up to 100%, so an 80% LTV means 20% equity.
Does LTV use the price or the appraised value?
Lenders typically use the lower of the purchase price and the appraised value. On a purchase that is usually the price; after an appraisal the lower figure governs the ratio.
Why does my lender care about LTV?
LTV measures how much cushion the lender has if it ever needs to sell the property. A lower LTV means more of your own money absorbs any price drop, which reduces the lender’s risk and often your rate.
How can I lower my LTV?
Put down a larger deposit, buy a less expensive property, or — for an existing loan — pay down the balance or wait for the property to appreciate. Any of these raises equity and lowers LTV.
Is this calculator currency-specific?
No. LTV is a ratio, so the result is the same whether you enter values in dollars, pounds, euros, rupees, or any other currency, as long as both figures use the same one.
Sources & References
Figures on this page are checked against primary, authoritative sources. Links open in a new tab.
Loan and property value are entered in the same currency; the ratio is currency-neutral.
Property value is the lower of price and appraisal in most lending decisions — this is an estimate using whatever you enter.
Results ignore fees, mortgage insurance thresholds, and lender-specific overlays, which vary by country, lender, and date.
For purchase deals the value is usually the price; for refinances it is the appraised value.
Where it stops
A single LTV does not capture combined LTV when there is a second loan or HELOC on the property.
Lender LTV limits and insurance rules differ widely by region and product and are not modelled here.
If property value is zero the tool returns 0 rather than an error.
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Results are estimates based on the figures you enter and standard formulas. Rates, fees, taxes, and lender terms vary and change over time, so confirm important numbers with your lender or a qualified professional. This is educational information, not financial advice.
Published the calculator with its formula, worked example, assumptions, limitations and a bespoke guide, and added an automated formula test suite covering it.
Tested both directions — LTV from a loan, and the maximum loan at a target LTV — so the two modes cannot disagree on the same property.
Frequently Asked Questions now show on the page: 6 answers, checked in a page-by-page audit.
Show it to your clients, not just tell them
Mortgage brokers, accountants, and advisors embed this to walk clients through the numbers live — nothing they enter ever leaves their browser.