Maximum Loan-to-Value Ratio

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DEFINITION

The maximum ratio of a loan's size to the value of the property, which secures the loan. The loan-to-value ratio is a measure of risk used by lenders. Different loan programs are viewed to have different risk factors, and therefore, have different maximum loan-to-value ratios.

INVESTOPEDIA EXPLAINS

These programs allow for a high maximum loan-to-value ratio, and are designed specifically for low to moderate income and first-time home buyers. Many of these programs are sponsored by state and local governments, the Federal Housing Authority and the Veterans Administration. It is wise for a borrower to investigate these options before being selecting any one lender's high loan-to-value program.


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