Glossary
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Loan to Value (LTV)

# Loan to Value (LTV)

### What is Loan to Value?

You might have heard your lender talk about Loan to Value and that they're unwilling to lend if the loan to value ratio is too high. What is loan to value anyways?

Loan to Value is the ratio of the amount you're borrowing versus how much the underlying property is worth. If you have a high loan to value (LTV) ratio, it means you're borrowing more money and investing less cash into the property. If you have a low loan to value (LTV) ratio, it means you're borrowing less money and investing more cash into the property yourself.

### How to calculate the Loan to Value Ratio?

Property investors can simply calculate the Loan to Value ratio using this formula:

${ Total \, amount \, borrowed \over Total \, appraised \, value }$