Loan-to-value is the loan amount divided by the property's appraised value or purchase price, expressed as a percentage, used by lenders to gauge risk on a loan. A lower LTV leaves more equity cushion for the lender if the borrower defaults, and lenders typically cap LTV lower for investment property and rehab loans than for an owner-occupied purchase.
Why it matters
The LTV a lender allows sets how much cash a buyer needs at closing, which affects how fast a sale can happen.