Loan-to-Value ratio (LTV) is the fundamental metric lenders use to measure leverage on a real estate transaction. It tells you — and them — what percentage of the property's value is financed with debt. LTV drives your interest rate, determines what loan products you qualify for, and sets the maximum you can borrow. Every serious investor needs to understand LTV deeply, because managing leverage is the difference between scalable investing and financial catastrophe.
How to Calculate LTV
LTV = Loan Amount ÷ Property Value × 100
Examples:
- $200,000 loan on a $250,000 property = 80% LTV (20% equity)
- $150,000 loan on a $200,000 property = 75% LTV (25% equity)
- $130,000 loan on a $200,000 property = 65% LTV (35% equity)
The "value" in LTV is the lower of the purchase price or appraised value. If you buy a $200,000 property at a $180,000 purchase price, lenders use $180,000 as the value — protecting them from overpayment risk.
LTV Requirements by Loan Type
- FHA (owner-occupied): Up to 96.5% LTV (3.5% down)
- VA (owner-occupied, eligible veterans): Up to 100% LTV (0% down)
- Conventional owner-occupied: Up to 95% LTV (5% down)
- Conventional investment property: Maximum 80% LTV (20% down) for SFR, 75% for 2-4 units
- DSCR loans: Typically 75-80% LTV maximum
- Hard money (as-is value): 65-75% LTV of current value
- Hard money (ARV-based): 65-70% of After Repair Value
The BRRRR LTV Connection: In a BRRRR strategy, your goal is to refinance out most or all of your initial capital. For that to work, the post-renovation appraised value must be high enough that a 75% LTV refinance covers your acquisition + rehab costs. Run these numbers before you buy — not after. Use the BRRRR Analyzer to model your target refinance LTV automatically.
Model Your LTV and Leverage Scenarios
See how different down payments and loan amounts change your cash flow, cash-on-cash return, and equity position.
Open Property Analyzer →How LTV Affects Your Interest Rate
Every 5-10% increase in LTV triggers higher pricing. Fannie Mae and Freddie Mac's Loan Level Price Adjustments (LLPAs) add cost to high-LTV loans. On investment properties, pricing tiers typically work like this:
- ≤60% LTV: Best available rate
- 61-65% LTV: +0.25-0.375% to rate
- 66-70% LTV: +0.5-0.75% to rate
- 71-75% LTV: +0.75-1.0% to rate
- 76-80% LTV: +1.0-1.5% to rate (if available at all for investment)
A larger down payment doesn't just reduce your loan balance — it improves your rate, potentially saving more than the additional equity costs you in opportunity capital.
LTV in the Context of BRRRR and Portfolio Scaling
Sophisticated investors think about LTV at the portfolio level, not just deal by deal. Maintaining a portfolio LTV of 65-70% gives you a cushion against market downturns, keeps refinancing options open, and ensures you can service debt even if occupancy dips. Investors who push to 80%+ LTV on every deal in a rising market often find themselves trapped when values correct and lenders tighten. See our guide on real estate portfolio strategy for how to balance growth with risk management.
