How to Calculate Loan-to-Value Mortgage Ratio
- 1). Find the value of the property that a prospective homeowner wishes to buy. This is the same as the house's appraised value.
- 2). Determine the amount of the loan that is requested by the home buyer. This is generally the sales price of the home, minus the down payment plus any other fees.
- 3). Calculate the loan-to-value ratio by dividing the amount of the loan by the home's appraised value and multiplying by 100.
If a $150,000 loan is issued for a house with an appraised value of $200,000, the loan-to-value ratio would be 75 percent. In other words, 75 percent of the home was purchased with money that was borrowed.
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