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Glossary

What is Loan-to-Value Ratio (LTV)?

Loan-to-value ratio compares the amount of a loan to the appraised value of the asset securing it, expressed as a percentage. It is widely used in real estate and equipment lending. A lower LTV means the borrower has more equity and the lender has more protection, which can lead to better terms. Lenders set maximum LTVs that vary by property type, loan program and borrower profile, and the difference between the purchase price and the loan amount is usually covered by a down payment.

Example

A $750,000 loan on a property appraised at $1,000,000 has an LTV of 75%.

Related funding

Commercial Real Estate: Buy, refinance or improve the property you operate from.

Related terms

LLC (Limited Liability Company)Maturity DateMerchant Cash AdvanceAll terms

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