How this number is made
Loan-to-value is the loan divided by the value. Combined loan-to-value uses every loan on the house. Type the total of the loans if you have more than one.
- Value is the appraisal or the price the lender is using.
- Add a second mortgage or HELOC balance into the loan line for a combined ratio.
Formula
Loan-to-value = loans ÷ value.
Worked example
With the figures already in the form, loan to value is 80.0%.
Questions
Why does 80% keep coming up?
It is the usual line where conventional mortgage insurance is no longer required, and where many equity lenders stop. It is a custom of the market, written into guidelines, not a physical law.
Whose value?
The lender’s. A higher automated estimate does not change the ratio until someone in the transaction accepts it.