What is the Definition of Loan-to-Value Ratio?

Loan-to-Value Ratio


Definition: The ratio between the principal amount of the mortgage balance, at origination or thereafter, to the current value of the underlying real estate collateral; referred to as LTV. The ratio is commonly expressed to a potential borrower as the percentage of value a lending institution is willing to finance. The ratio is dynamic and varies by lending institution, property type, geographic location, property size, among other things.

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