Loan-to-Value Ratio: Formula and Calculator

Calculate loan-to-value (LTV) ratio by dividing the loan amount by the value of the property or other asset securing it, then multiplying by 100. Enter both amounts below to get the LTV percentage and the portion of the asset value not covered by the loan.

Formula

The loan-to-value ratio is the loan amount divided by the asset value, multiplied by 100:

LTV (%) = (Loan amount ÷ Asset value) × 100

• Loan amount is the amount borrowed or, where relevant, the outstanding balance being assessed, in dollars.
• Asset value is the property or other collateral value used for the calculation, in dollars.
• LTV is the resulting percentage. The calculator rounds it to two decimal places.

The second result, value above loan amount, is simply asset value minus the loan amount. It is a mathematical difference, not necessarily the owner’s complete equity: other debts secured against the asset, selling costs, or changes in value may affect what would remain.

Worked Example

Using the calculator’s defaults—loan amount of $200,000 and property or asset value of $250,000:

1. Divide the loan amount by the value: $200,000 ÷ $250,000 = 0.8.
2. Multiply by 100 to express the result as a percentage: 0.8 × 100 = 80.00% LTV.
3. For the additional output, subtract the loan from the value: $250,000 − $200,000 = $50,000.

So the loan equals 80% of the stated asset value. The remaining 20% is the difference expressed as a share of that value, before considering any other claims or costs.

Assumptions

• The loan amount and asset value are entered in the same currency and refer to the same asset.
• The calculation uses the values supplied; it does not estimate or update the asset’s value.
• Interest rate, payment timing, and compounding do not affect this ratio, so they are not included.
• Fees, taxes, insurance, other liens, and transaction costs are not included.

What LTV Tells You

LTV describes a loan in relation to the value of its collateral. For a mortgage, it is commonly calculated using the mortgage balance and the home value selected for the assessment. For an auto loan or another secured loan, the same arithmetic applies if a relevant asset value is available. Lenders may use their own valuation methods and may consider additional information; this calculator does not establish a lender’s assessment.

For instance, an 80% LTV means the loan is four-fifths of the asset value used in the calculation. A 100% result means the loan amount equals that value. Above 100%, the loan amount is greater than the entered value. These are descriptions of the arithmetic, not a judgment about a loan or a prediction of approval, costs, or outcomes.

The equity output is useful as a quick comparison, but it can be misunderstood. If a property is worth $250,000 and the mortgage balance is $200,000, the simple difference is $50,000. If another loan is secured by the same property, or if selling expenses apply, that figure is not the amount necessarily available to the owner.

Choosing the Right Inputs

The calculation is simple; selecting consistent, relevant figures is the part that requires care. Use the loan amount appropriate to the question. A new-loan estimate might use the proposed amount, while a current LTV calculation may use the outstanding principal balance. The original amount borrowed and today’s balance can differ as payments are made.

• Use a matching asset value: compare a property loan with the value of that property, not its purchase price by default if the question calls for a different valuation.
• Check the valuation date: asset values can change, and an older estimate may not represent a current value.
• Include the relevant debt: if you need combined LTV, add the balances of all loans secured against the asset before dividing by its value.
• Keep units consistent: enter both amounts in the same currency. Converting one amount but not the other gives a meaningless percentage.

For a lender’s specific LTV figure, ask which loan balance and valuation it uses. A lender’s rules and valuation process are not represented by this general calculator; obtain the actual figures and definitions from the lender.

Common Calculation Errors and Limits

A frequent mistake is reversing the division. Asset value divided by loan amount produces a different measure, not LTV. Another is entering the loan amount as a percentage already: the calculator expects dollar amounts and applies the conversion to a percentage itself. Rounding the inputs too early can also shift the displayed result, especially when the loan is close to the asset value.

The formula assumes a positive asset value. The calculator rejects zero because division by zero is undefined. A loan amount of zero gives an LTV of zero, while a loan above the stated value correctly produces a result above 100%; that outcome should not be capped at 100. The calculator does not determine market value, account for multiple liens automatically, or include interest, payment history, income, credit information, or lender-specific criteria.

Frequently Asked Questions

How do I calculate LTV by hand?
Divide the loan amount by the asset value, then multiply by 100. For example, $120,000 ÷ $150,000 × 100 = 80%.

What does an 80% loan-to-value ratio mean?
It means the loan amount is 80% of the asset value used in the calculation. It does not, by itself, tell you whether a loan will be approved or what it will cost.

Can LTV be over 100%?
Yes. If the loan amount exceeds the entered asset value, the result is greater than 100%. Check that the figures are current and that you used the intended balance and valuation.

Should I use the original loan amount or the remaining balance?
Use the figure relevant to your question. A current LTV calculation generally compares the current outstanding balance with the asset value, while a proposed-loan calculation uses the proposed amount.

How do I calculate combined LTV?
Add the balances of all loans secured by the same asset, divide that total by the asset value, and multiply by 100. This calculator’s loan input can represent that combined total.

Does a lower LTV guarantee approval or a particular loan cost?
No. LTV is only one measure and does not establish approval or pricing. Lenders may consider other information and apply their own valuation and assessment methods.

This result is an estimate, and the lender’s disclosure gives the exact figures.

Related

• Auto Loan-to-Value Ratio Calculator: How It Works
• Line Balance Rate Formula and Calculator
• New Jersey Notice of Unpaid Balance and Lien Rights

in loan | Loan amount | $ | 200000 | 0 | 100000000
in value | Property or asset value | $ | 250000 | 0.01 | 100000000
out ltv | Loan-to-value ratio | % | loan / value * 100 | 2
out equity | Value above loan amount | $ | value - loan | 2