In Real Estate, What Does LTV Stand For?
June 13, 2008 · Print This Article
LTV stands for Loan To Value, and it reflects the percentage of a sales price that is borrowed by a borrower. For example, if a program allows for an LTV of 95%, and the sales price is $100,000… the borrower may borrow up to $95,000. FHA is a great program for those with limited funds, because it allows for a LTV of 97%.
On a standard 30 year fixed amortized jumbo loan (over $417,000), a borrower can borrow the following:
- loan amount from $417,001 to $650,000 has an LTV of 90% with a credit score of 660
- loan amount from $650,001 to $1.5MM has an LTV of 80% with a credit score of 680
- loan amount from $1,500,000 to $2MM has an LTV of 80% with a credit score of 700
- loan amount from $2,000,001 to $3MM has an LTV of 70% with a credit score of 720
Let’s look at an example:
You like a house with a sales price of $900,000, and you want to put 10% down. This would leave you with a loan amount of $810,000 and an LTV of 90%. As you can see from the above, a loan amount between $650,001 and $1M requires an LTV of 80%. You will need to find another 10% to put down for a loan amount of $720,000, or find another house.
Another example:
You like a house with a sales price of $750,000 and want to put 10% down. This would leave you with a loan amount of $675,000 and an LTV of 90%. This also won’t fit in the bulleted points above, however, you are very close to the $650,000-and-below tier. Instead of forcing you to come up with another 10% for a 20% down payment, you will only be required to come up with an additional $25,000 to get to the $650,000 tier, which only requires a minimum down payment of 10%.
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Eric Hundin