Loan-to-value
The loan amount as a percentage of the home's value. An 80% LTV means the loan is 80% of the price. Higher LTV usually means higher rate or required mortgage insurance.
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See how it worksWhere this comes up: on the market
Part 1 of 4
Why a seller cares
LTV is the buyer's loan against your home's value, and the appraisal sets the value. A high LTV means a low appraisal has nowhere to go but the price; a low one means the buyer has room.
Part 2 of 4
A simple example
A $285,000 loan on a $300,000 price is 95% LTV. The appraisal comes in at $290,000.
| What happens | What the LTV does |
|---|---|
| Appraisal at $290,000 | The loan would be 98% of value; the lender caps it at 95% of $290,000 |
| The buyer brings the difference | About $5,000 more cash to keep the price |
| A buyer at 80% LTV in the same spot | Absorbs the gap with no change to the loan |
The lower the buyer's LTV, the less the appraisal can hurt the price.
Part 3 of 4
What people get wrong
That LTV is the buyer's problem alone. It decides how much of an appraisal gap lands on the seller's price.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
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