Small Business Dictionary

Loan-To-Value Ratio (LTV)

Loan-To-Value Ratio (LTV) is a lending risk assessment ratio that financial institutions use for approval of a business or residential mortgage, Home Equity Loan, or Home Equity Line of Credit. The Loan-To-Value Ratio determines the amount of a given mortgage loan and the lower level sales price of its appraised value. Typically, the higher the LTV, the higher the interest rate and chance of a loan application being declined because of its risk for default.