Loan To Value Calculator
Compute loan-to-value, find the thresholds that govern mortgage insurance, and see why appreciation does not accelerate automatic PMI termination.
Loan To Value Calculator
Results recalculate instantly on every keystroke. Nothing you type is transmitted.
What this result does not account for
- HPA thresholds described apply to US conventional loans; FHA, VA and non-US products differ.
- Assumes a fixed rate and level payments.
- Does not model lender overlays, which can be stricter than the statute.
In short: LTV is the loan divided by value. Above 80% mortgage insurance normally applies. Under the US Homeowners Protection Act you may request cancellation at 80% and it terminates automatically at 78% — both measured against the ORIGINAL value, never the current one.
Formula
LTV = loan ÷ value
HPA: request at 80% · automatic at 78% · both on ORIGINAL value
[('loan', 'outstanding principal balance'), ('value', 'purchase price or appraised value at origination'), ('80% threshold', 'borrower may request cancellation in writing'), ('78% threshold', 'servicer must terminate automatically')]
Worked Example
- Divide the loan by the property value at origination.
- Check whether the result exceeds eighty per cent, which triggers mortgage insurance.
- Project the balance forward on the amortisation schedule.
- Find when it reaches eighty per cent of the ORIGINAL value — the request point.
- Find seventy-eight per cent of that same original value — the automatic termination point.
A 315,000 loan on a 350,000 purchase is a 90% LTV, so mortgage insurance applies. On a 6.5% thirty-year schedule the balance reaches 280,000 — 80% of the original value — at about month 95, and 273,000 at month 109 when termination becomes automatic. Note what happens at month 24: the balance of 307,722.53 is 70.34% of a current value of 437,500, comfortably under 80%, yet 87.92% of the original value. Nothing terminates automatically.
Strengths & Limits Of This Model
Where this engine is strong
- Computes both original-value and current-value ratios
- Finds the exact month each statutory threshold is reached
- Demonstrates why appreciation does not accelerate termination
Where it stops
- US conventional rules
- Fixed-rate assumption
Practical Use Cases
Testing whether PMI applies
Checking the ratio at origination against the eighty per cent threshold.
Planning PMI removal
Finding the month the balance reaches each statutory threshold.
Comparing deposit options
Seeing whether a larger deposit crosses into a better pricing band.
Assessing a refinance
Computing the ratio against today's value rather than the original.
Understanding a rate quote
Relating the loan-to-value band to the risk adjustment being charged.
Methodology & Editorial Standards
The ratio is the balance divided by value. Threshold months are found by iterating the amortisation schedule until the balance first falls to eighty and seventy-eight per cent of the ORIGINAL value, which is the basis the Homeowners Protection Act specifies — the page computes the current-value ratio alongside precisely so the difference is visible rather than assumed. The midpoint backstop is reported as half the amortisation term in months.
Computation runs in IEEE-754 double precision at full internal precision; rounding to two decimal places occurs strictly at the display layer, so no cumulative drift enters the result. All monetary outputs use accounting presentation — grouped thousands, two decimals, negatives in parentheses — so figures can be transcribed directly into a model or working paper. Division-by-zero and out-of-domain inputs return an em-dash rather than a misleading number.
This engine was reconciled against an independent reference implementation and hand-verified for the worked example above before release. Our full five-stage review process is published on the About Us page.
Disclaimer. This calculator is provided for informational and modelling purposes only and does not constitute financial, tax, legal, medical, or engineering advice. Verify all figures with a qualified professional before acting on them.
Loan To Value Calculator — 10 Expert FAQs
10 analyst-written answers to the questions practitioners actually ask — optimised for voice and answer-engine retrieval.
What LTV do I need to avoid PMI?
Eighty per cent or below on a conventional loan, which means a deposit of at least twenty per cent. Some lender-paid and piggyback structures avoid a separate premium but generally recover the cost through a higher rate or a second loan, so compare the total cost rather than the presence of a line item.
When can I cancel PMI?
Under the Homeowners Protection Act you may request cancellation in writing once the balance reaches eighty per cent of the original value, provided you have a good payment history and the value has not declined. It terminates automatically at seventy-eight per cent with no request needed, and there is a final backstop at the midpoint of the amortisation period.
Does my home's appreciation cancel PMI faster?
Not automatically, and this is the provision that catches people out. The statutory thresholds are measured against the original value, so a rise in price does not move them. You can still use appreciation, but only by requesting cancellation with a new appraisal you pay for, or by refinancing — both require you to act.
What is the difference between LTV and CLTV?
LTV counts one loan. CLTV counts every lien secured against the property, so a second mortgage or a HELOC raises it above the first-lien LTV. Lenders apply both simultaneously, and it is common to satisfy the first and fail the second.
Is LTV based on the purchase price or the appraisal?
At origination, lenders use the lower of the two. If a property appraises below the agreed price the ratio is computed on the appraisal, which means the buyer must increase the deposit to cover the gap. This is why a low appraisal can break a transaction that both parties still want.
How does LTV affect my interest rate?
Materially. Risk-based pricing steps at each five-point band, so moving from eighty-five to eighty per cent can improve both the rate and remove the insurance premium at once. That makes the last few thousand pounds of deposit before a band boundary the most valuable money in the transaction.
What is a good LTV for an investment property?
Lenders typically cap investment purchases at seventy-five to eighty per cent, and cash-out refinances lower still, often seventy to seventy-five. Lower ratios secure better pricing but reduce the leverage that drives equity returns, so the right level depends on whether your leverage is positive.
Does PMI apply to FHA or VA loans?
They work differently. FHA loans carry their own mortgage insurance premium with separate rules, and on most modern FHA loans it lasts the life of the loan rather than cancelling at a threshold. VA loans have no ongoing mortgage insurance but charge a funding fee. The Homeowners Protection Act thresholds described here apply to conventional loans.
Can my LTV go up?
Yes, if the property falls in value. The balance amortises down but the denominator can move against you, and in a sharp correction a high-LTV loan can pass one hundred per cent into negative equity. That is the risk the lender's cap is designed to absorb, and it is why they reserve a slice of value.
Do I need to be current on payments?
Yes, for both routes. The Act conditions cancellation and automatic termination on the borrower being current, and borrower-requested cancellation additionally requires a good payment history — no payment sixty days late in the last two years, none thirty days late in the last one.