Qualifying

LTV (Loan-to-Value Ratio)

LTV, or loan-to-value ratio, compares your loan amount to the home's value, shown as a percentage. If you borrow $360,000 on a $400,000 home, your LTV is 90%. A lower LTV means more equity, which can affect your rate, your mortgage insurance, and the programs you may qualify for.

A bigger down payment lowers your LTV, because you’re borrowing less against the same value. That extra equity can work in your favor: it may help you avoid mortgage insurance on a conventional loan once you’re at or below 80%, and it can give a lender more confidence in your file.

LTV shows up at refinance time too, where it’s based on your current balance versus today’s value. If your home has gone up in value, your LTV may have dropped even if you haven’t paid much down, which can open up new options. I can help you figure out where your LTV likely stands.

Related terms

PMI (Private Mortgage Insurance)

PMI, or private mortgage insurance, is a fee that protects the lender, not you, when you put less than 20% down on a conventional loan. It's usually added to your monthly payment. Once you build enough equity, you can often request to have PMI removed, which lowers your payment.

DTI (Debt-to-Income Ratio)

DTI, or debt-to-income ratio, compares your monthly debt payments to your gross monthly income, shown as a percentage. Lenders use it to judge how much new payment you can handle. There are two versions: front-end counts housing only, and back-end counts all your monthly debts plus the housing payment.

Conventional Loan

A conventional loan is a mortgage that isn't backed by a government program like FHA or VA. It often needs solid credit, but it can allow down payments as low as 3% and lets you drop mortgage insurance once you build enough equity. It's the most common loan type for many buyers.

Last updated: June 5, 2026

This definition is educational and isn't an offer to lend or financial advice. Rates, programs, and guidelines may change without notice. All loans are subject to credit and property approval.

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