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Loan to Value Ratio | Home Lending | Chase.com

Reasons to Refinance

Understanding your loan-to-value ratio

Your loan-to-value ratio (LTV) describes what you owe on your mortgage as a percentage of the total current value of your property. It’s important to understand your LTV ratio, because it affects the rate and type of new loan you may qualify for.

What is a Good Loan-to-Value Ratio?

A good loan-to-value depends on the type of mortgage or refinance loan you're applying for. A prime LTV for a home loan is 80%. More than 80% and you may have to get private mortgage insurance. FHA loans have a LTV of 97% with a requirement of 3% down.

Calculating your LTV

Let's say the current appraised value of your home is $200,000. The remaining mortgage balance is $160,000. $160,000 is 80% of $200,000 — so that’s an 80% loan-to-value ratio.

Generally, a lower LTV ratio is better, although we consider many factors when figuring out your refinance options.

  • A lower LTV ratio may get you a better rate and can let us know if you have enough equity to get a cash-out refinance.
  • A higher LTV ratio means you have less equity in your home, and your refinancing may require Private Mortgage Insurance (PMI).

Ready to refinance your mortgage?