my loan-to-value-ratio (on a recent mortgage application) is 87%. How is this ratio calculated?

Deal Score0

thank you

  1. Reply
    May 3, 2011 at 4:28 am

    You take the amount of your loan and divide it by the appraised value of your property.

  2. Reply
    May 3, 2011 at 4:40 am

    Divide what you owe (or about to owe) against the value of your house.

    For example you owe 150,000 and the house is worth 200,000 your LTV is 75%.

  3. Reply
    Stephanie V
    May 3, 2011 at 5:16 am

    your loan to value is calculated by the money you put down as compared to the sales price. this means that you are putting down 13% on the home. an 87% loan to value or LTV will require PMI in most cases. the other ratio to be concerned with is the debt to income ratio or DTI. this is a ratio calculated by taking all the debts you currently pay, as expressed on your credit report, and the proposed mortgage payment on the application. generally you will want to be at 45% or less though some lenders will accept up to 55%. to put that into perspective a little more….

    If you make $ 5,000 a month and your current debts are $ 500/month and the new mortgage payment is $ 2,000 then you would be at a 50% debt to income ratio.

  4. Reply
    May 3, 2011 at 5:31 am

    Loan amount divided by appraised value equals LTV.

    What concerns me is that your loan officer didn’t explain this to you. If your loan officer can’t explain LTV, then quickly fire him/her and get one with some knowledge and experience.

    Good luck.

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