Loan-to-value
The loan amount as a percentage of the home's value. An 80% LTV means the loan is 80% of the price. Higher LTV usually means higher rate or required mortgage insurance.
Every term like this one lights up in the step you're on.
Free to set up. No credit card.Part 1 of 4
Why a seller cares
LTV is the buyer's loan against your home's value, and the appraisal sets the value. A high LTV means a low appraisal has nowhere to go but the price; a low one means the buyer has room.
Part 2 of 4
A simple example
A $285,000 loan on a $300,000 price is 95% LTV. The appraisal comes in at $290,000.
| What happens | What the LTV does |
|---|---|
| Appraisal at $290,000 | The loan would be 98% of value; the lender caps it at 95% of $290,000 |
| The buyer brings the difference | About $5,000 more cash to keep the price |
| A buyer at 80% LTV in the same spot | Absorbs the gap with no change to the loan |
The lower the buyer's LTV, the less the appraisal can hurt the price.
Part 3 of 4
What people get wrong
That LTV is the buyer's problem alone. It decides how much of an appraisal gap lands on the seller's price.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
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