Qualifying
Loan-to-value (LTV)
The ratio of your loan amount to the home's value, expressed as a percentage. A lower LTV means more equity, better pricing, and — below 80% — no PMI.
What does loan-to-value mean?
LTV compares what you owe to what the home is worth: a $240,000 loan on a $300,000 home is 80% LTV. It drives several things at once — your interest rate, whether you pay PMI, and how much you can borrow against equity. Conventional PMI cancels at 78% LTV, and home equity lenders typically cap your combined LTV (first mortgage plus second) at 80–90%. Lowering LTV through a larger down payment or rising home value is one of the cleanest ways a Michigan owner improves loan terms.
Common questions
What LTV do I need to avoid PMI?
80% or lower on a conventional loan — a 20% down payment. Above 80%, PMI applies until you reach 78% LTV, when it cancels automatically.
How does LTV affect my rate?
A lower LTV means less risk to the lender, which usually earns better pricing. It also determines how much you can borrow against equity.
What is combined LTV?
Your first mortgage plus any second loan (like a HELOC), divided by the home's value. Michigan equity lenders typically cap it at 80–90%.
Related terms