To find the LTV ratio, divide the loan amount by the property’s appraised value or the purchase price, whichever is lower. A professional appraiser determines the appraised value.
Imagine a home’s purchase price is $300,000, and its appraised value is $290,000. The LTV ratio uses the lower value: of $290,000.
Loan Amount / (Appraised Value or Purchase Price) = LTV Ratio
If you want to borrow $240,000, the LTV ratio is 82.76% ($240,000 / $290,000).
