How LTV is calculated
Loan-to-Value compares how much you're borrowing to the value of the asset securing the loan. Lenders use it to gauge risk: the more of the collateral's value that's covered by debt, the less cushion there is if the asset's price falls.
- Loan amount — the amount borrowed against the collateral
- Collateral value — the appraised or market value of the collateral (e.g. home price)
More detail
Why lenders watch LTV
A higher LTV means the borrower has less equity in the asset, so the lender has less protection if it needs to sell the collateral to recover the loan. Lenders commonly use LTV bands to set interest rates, require mortgage insurance, or cap the maximum loan they'll approve.
LTV limits vary and change over time
Maximum allowed LTV differs by region, property type, and loan program, and regulators periodically revise these limits. This calculator only computes the ratio — check current rules with your lender or the relevant regulator before assuming a specific cap applies.
Money tip. A lower LTV (more equity, less debt relative to value) typically qualifies for better interest rates and doesn't require mortgage insurance — increasing your down payment even modestly can move you into a better LTV band.
Frequently asked questions
What does a high LTV ratio mean for me?
A high LTV means you're borrowing a large share of the collateral's value with little equity cushion. Lenders often charge higher rates, require mortgage insurance, or decline loans above a certain LTV — enter your numbers above to see where you land.
How is LTV different from DTI or DSR?
LTV compares the loan to the collateral's value; DTI and DSR compare your debt payments to your income and repayment capacity. A loan can have a low LTV but still fail a DTI/DSR test, or vice versa — lenders typically check both.
How do I find my loan's actual LTV limit?
Maximum LTV depends on your region, whether the property is in a regulated area, the property type, and the loan program — it isn't a single universal number. Ask your lender or check the relevant financial regulator's current announcement for the applicable limit.
How is the collateral value determined?
Lenders typically use an appraisal, a recognized market price index (like KB Kookmin's housing price series in Korea), or the recent transaction price — not simply what the borrower believes the property is worth. The value used can materially change your calculated LTV.