Question: What Does LTV Mean?

The LTV is the loan-to-value ratio of a mortgage or other type of high loan. What does it mean? Well if you buy a house worth $200,000 and put a down payment of 10% ($20,000), your LTV is 90%. That is 100% - 10$ down = 90% leveraged. Another way to calculate it is $200,000 - $20,000 = $180,000 loan value. Take the $180,000 loan value (i.e. the "L") and divide it by the appraised Value of the home (i.e. the "V"). Thus you get the "L" to "V" ratio of 90%. The problem with the current subprime housing market crash was that many people were getting approved for high LTV loans including those over 100%. That is to say, they owed $220,000 when the house only was worth $200,00 (= 110% LTV).