The loan to value ratio (LTV) is the amount of money you want to borrow compared with the appraised value of the home you want to buy. The amount of money you want to borrow depends on the price of the home and the amount of down payment you have. The appraised value is a number determined by the mortgage lender’s professional appraisers.
For example, if the home is priced higher than it appraises for, the buyer may be required to put up more of a down payment in order to get the mortgage he or she wants at the preferred rate without the requirement of mortgage insurance.
