Loan-to-Value (LTV)

LTV measures how much of a property is financed versus owned outright. A larger down payment means a lower LTV, which lenders read as lower risk because there is more equity cushioning the loan if values fall.

The 80 percent threshold matters most. On a conventional mortgage, an LTV above 80 percent (a down payment under 20 percent) usually triggers private mortgage insurance, and you can typically request its removal once the LTV drops back to 80 percent. LTV also sets borrowing limits on cash-out refinances and home equity lines, where lenders cap the combined loan-to-value they will allow against the home.