Definition of Financial Acronym LTV

LTV in financial terms is an acronym for “Loan To Value”. In basic this means the ratio between the appraised value of a property and how much the lender needs to borrow to buy it.

An example would be:

Home buyer needs a $250,000 loan on a home that is worth $270,000 dollars. Divide $250,000 by $270,000 [250000/270000] and you get 0.9259 which would be rounded up to .926 and then to .93 – so the LTV (or Loan To Value) is 93%

There are some banks that provide 100% LTV loans but they’re far and few between these days. Still, borrowers look for 100% LTV loans all the time in hopes of getting approved for a high risk mortgage.

The highest LTV you can get these days seems to be around 90% depending your credit rating and the bank’s, or private lender’s, risk assessment.

Many disagree with this statement but I have rarely seen the good old 100% LTV HELOC approved in the last year and a half – I have yet to see a 90 percent LTV HELOC approved either.

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This was written by . Posted on Friday, January 2, 2009, at 7:58 am. Filed under Glossary. Tagged financial definitions, financial terms, ltv acronym, ltv loans. Bookmark the permalink. Follow comments here with the RSS feed. Post a comment or leave a trackback.

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