How do I calculate my loan-to-value ratio?

Divide the mortgage amount by the property's appraised value or purchase price, then multiply by 100. For example, a $300,000 loan on a $375,000 home is an 80% LTV.

Why does an LTV over 80% require insurance?

Above 80% LTV the borrower has less than 20% equity, which Canadian rules treat as higher risk. Default insurance from CMHC, Sagen, or Canada Guaranty protects the lender, and the borrower pays the premium.

Does my LTV change over time?

Yes. As you pay down the principal and as your property value changes, your LTV shifts. Lower LTV over time can give you more refinancing room and access to better mortgage products.

Mortgage Glossary

What is Loan-to-Value Ratio (LTV)?

The loan-to-value ratio (LTV) is the size of your mortgage compared with the value of the property, expressed as a percentage. You calculate it by dividing the loan amount by the property's appraised value or purchase price. A higher LTV means a smaller down payment and more risk for the lender.

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Quick answer

Also known as: LTV, LTV ratio

Key points

LTV equals the loan amount divided by the property value.
A higher LTV means a smaller down payment and more lender risk.
LTV above 80% requires mortgage default insurance.
LTV at 80% or below is conventional and uninsured.
Refinancing is generally capped at 80% LTV.
Equity is the flip side of LTV: 80% LTV means 20% equity.

Loan-to-Value Ratio (LTV) explained

Loan-to-value ratio measures how much of a property's value is financed by the mortgage. If you borrow $360,000 against a $400,000 home, the LTV is 90%. The remaining 10% is your equity, contributed through the down payment. Lenders rely on LTV as a core risk measure, because the more equity a borrower has, the less the lender stands to lose if the loan defaults.

In Canada, an LTV above 80% (a down payment under 20%) makes the mortgage high-ratio and requires default insurance. At 80% or below, the mortgage is conventional and uninsured. LTV also matters at renewal and refinancing, since you generally cannot refinance above 80% LTV, and it influences the rates and products you qualify for.

What a Loan-to-Value Ratio (LTV) is for

LTV exists so lenders can gauge the risk of a mortgage at a glance. A low LTV signals a substantial equity cushion that protects the lender if property values fall or the borrower defaults. It is the trigger that determines whether default insurance is required and shapes which mortgage products and rates a borrower can access.

How it can help you

Knowing your LTV helps you understand whether you will need mortgage insurance, how much you can refinance, and how lenders view your application. Lowering your LTV by adding to your down payment can remove the insurance requirement entirely. When you are comparing options, Lenderoo shops 40+ lenders for free so you can see how different lenders price your particular LTV.

When it comes up

A homeowner wants to refinance to consolidate debt. Their lender confirms they can borrow up to 80% LTV. With their home appraised at $500,000, that caps the new mortgage at $400,000. Knowing this, they calculate how much equity they can responsibly tap without exceeding the limit.

Example: Calculating LTV

You are buying a $450,000 home and have saved a $90,000 down payment. Your mortgage is $360,000.

Divide the loan by the value: $360,000 divided by $450,000 equals 0.80, or an 80% LTV. Because you are at exactly 80%, your mortgage is conventional and does not require default insurance. If you had put down only $45,000, your LTV would be 90% and insurance would be required.