The loan-to-value ratio (LTV) is the percentage of a home’s price that is financed with a loan. On a house worth $100,000, if the buyer makes a $20,000 down payment and borrows $80,000, the loan-to-value ratio is 80 percent. When refinancing a mortgage, the LTV ratio is calculated using the appraised value of the home, not the sale price. You will usually get the best deal if your LTV ratio is below 80 percent.
The combined loan-to-value ratio is the total amount the buyer is borrowing in mortgage debt divided by the home’s fair market value. Someone with a $50,000 first mortgage and a $20,000 equity line secured against a $100,000 house would have a CLTV ratio of 70 percent.
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