LTV (Loan-to-Value Ratio)

Intermediate 🏠 Real Estate

Definition

The percentage of a property's value that's financed through a loan versus down payment. Higher LTV means less cash down but more risk for the lender and more PMI for you.

Example Usage

Our 80% LTV mortgage meant we put down 20%, which was enough to avoid PMI.

Origin

Standard banking terminology from lending practices

Fun Fact

LTV ratios above 80% typically require PMI, which can cost 0.5-1.5% of the loan amount annually

Source: Mortgage industry standards and banking regulations

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