The loan-to-value (LTV) ratio is an equation which expresses the amount of a first mortgage as a percentage of the total appraised property value.
Loan to value is one of the key factors that lenders review when qualifying a borrower for a mortgage. Default is key to the lending decisions, and the likelihood of a lender absorbing a loss in case of a foreclosure increases as the amount of equity decreases.. Lenders may require borrowers of high LTV loans to buy mortgage insurance to protect the lender.