DEFINITION of 'Maximum Loan-to-Value Ratio'

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.

BREAKING DOWN 'Maximum Loan-to-Value Ratio'

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.

RELATED TERMS
  1. Qualifying Ratios

    A set of ratios that are used by lenders to approve borrowers ...
  2. Loan-To-Value Ratio - LTV Ratio

    A lending risk assessment ratio that financial institutions and ...
  3. 125% Loan

    A loan, usually a mortgage, with an initial loan amount equal ...
  4. Hard Money Loan

    A loan of "last resort" or a short-term bridge loan. Hard money ...
  5. 80-10-10 Mortgage

    A mortgage transaction in which a first and second mortgage are ...
  6. Maximum Loan Amount

    Describes the maximum amount that a borrower can borrow. The ...
Related Articles
  1. Investing

    Understanding Loan-to-Value Ratio

    Loan-to-value ratio (LVR) is a tool used to evaluate the risk in a collateralized loan, usually a mortgage loan.
  2. Retirement

    When Are Mortgage Lenders Better Than Banks?

    Individuals seeking a mortgage loan should consider factors or circumstances that may make a mortgage lender a better choice than a traditional bank.
  3. Investing

    Commercial Real Estate Loans

    Obtaining a commercial real estate loan is quite different from borrowing for residential real estate. Here's what to expect and how to get what you need.
  4. Personal Finance

    3 Mortgage Hacks to Help Pay Off Your Student Debt

    Fannie Mae’s new program of easier cash-out mortgage refinances can lower student debt. Here’s how it all works.
  5. Personal Finance

    5 Ways to Up Your Chance of Getting a Mortgage

    Tips and ways to improve your chances of getting a mortgage.
  6. Investing

    The Reality of Commercial Real Estate Loans

    It’s corporations and partnerships that most commonly take out commercial real estate loans.
  7. Insights

    An Introduction to Government Loans

    Government loans further policymakers' efforts to create positive social outcomes by offering timely access to capital for qualified candidates.
  8. Investing

    Texas Ratio Rounds Up Bank Failures

    This measure can help investors spot potential trouble in a bank's financials. Find out how.
  9. Managing Wealth

    2 Ways to Refinance Your Home-Equity Loan

    Should you do a cash-out refinance or get a new home-equity loan? Also check with your lender about turning your adjustable-rate loan to a fixed rate.
  10. Personal Finance

    Refinancing Mortgages: Cash Out Vs. Rate/Term

    Understanding the pros and cons of each type of mortgage loan.
RELATED FAQS
  1. What industries use the loan to value ratio?

    Find out more about the loan-to-value ratio, what the ratio measures and what industries the loan-to-value ratio is most ... Read Answer >>
  2. How does the loan-to-value ratio affect my mortgage payments?

    Understand what the loan to value ratio is, how the ratio is calculated and learn how it has an impact on your mortgage payments ... Read Answer >>
  3. Why does the loan-to-value ratio matter?

    Learn how the loan-to-value (LTV) ratio is calculated, and why this metric is important to lenders when evaluating a home ... Read Answer >>
  4. How do stock dividends affect the retained earnings account?

    Understand the difference between financial ratio analysis and accounting ratio analysis. Learn why ratio analysis is important ... Read Answer >>
  5. What is considered a good net debt-to-equity ratio?

    Learn about the maximum acceptable debt to equity ratio, what it means about a company's capital structure and why the optimal ... Read Answer >>
  6. To what extent should you take a company's liquidity ratio into account before investing ...

    Find out how important it is for an investor to know a company's liquidity ratio before deciding to invest, and why relying ... Read Answer >>
Hot Definitions
  1. Money Market

    A segment of the financial market in which financial instruments with high liquidity and very short maturities are traded. ...
  2. Block (Bitcoin Block)

    Blocks are files where data pertaining to the Bitcoin network is permanently recorded.
  3. Fintech

    Fintech is a portmanteau of financial technology that describes an emerging financial services sector in the 21st century.
  4. Ex-Dividend

    A classification of trading shares when a declared dividend belongs to the seller rather than the buyer. A stock will be ...
  5. Debt Security

    Any debt instrument that can be bought or sold between two parties and has basic terms defined, such as notional amount (amount ...
  6. Taxable Income

    Taxable income is described as gross income or adjusted gross income minus any deductions, exemptions or other adjustments ...
Trading Center