In general, anything under 80% is considered to be a good LTV. Over 80% is considered to be a higher LTV, and whilst there are still mortgages available for 80%, 85%, 90% and even 95% LTVs, you'll have a smaller pool to choose from, and you may have to pay more in the long run.
In general, a good LTV hovers around 80% or less. At this range, lenders may be more willing to offer you a conventional home loan and at more competitive rates.
A good LTV could be anywhere from 40% to 75%. Generally, the lower the LTV the more likely you are to access better mortgage rates.
LTVs at 60% or below are considered the best in terms of getting the best mortgage deals. Ideally, lenders like to see LTVs at 80% or below. However, it is possible to sometimes find mortgage deals if your LTV is above 90%.
Anything above 80% is considered to be a high LTV, which means that borrowers may face higher borrowing costs, require private mortgage insurance, or be denied a loan. LTVs above 95% are often considered unacceptable.
If the loan-to-value were 90% for a $200,000 home, the required down payment would be $20,000.
As you're putting down such a large deposit, you'll own more of the property at the start of the mortgage. This means banks and building societies regard 50% LTV mortgages as lower risk and tend to offer more attractive interest rates, so you should get a good deal.
What is a 75% LTV mortgage? A mortgage's LTV, or loan-to-value ratio, represents the percentage of a property's value that you borrow. With a 75% LTV mortgage, you borrow 75% of the home's cost, while the remaining 25% is your deposit.
Your debt-to-income (DTI) ratio is how much money you earn versus what you spend. It's calculated by dividing your monthly debts by your gross monthly income. Generally, it's a good idea to keep your DTI ratio below 43%, though 35% or less is considered “good.”
What is a good LTV ratio? Different mortgage lenders will have different criteria for LTV ratios, but most prefer a ratio of 80% or below. Mortgages with higher LTV ratios pose a greater financial risk to a lender.
If your income varies from month to month, use your average income in the calculation. Most banking institutions will calculate your debt-to-income ratio when considering your loan application. The generally acceptable debt to income ratio is up to a maximum of 30%.
Most lenders consider anything under 80% to be a good LTV ratio but will vary by lender. While it's sometimes possible to borrow extra, anything above 80% tends to cost more.
100% LTV mortgages are considered relatively risky, and so are first-time buyers. For this reason, it's an absolute necessity that you have a guarantor if you are to apply for a no deposit mortgage. And even then, it's highly unlikely that your situation will allow you to secure such a mortgage.
Assuming there are no risk factors for the lender to take on board, you should be able to access the best mortgage rates with an LTV of 40% (or 60% deposit). Below you will find examples of some of the current rates for borrowers with this LTV.
A good benchmark for LTV to CAC ratio is 3:1 or better. Generally, 4:1 or higher indicates a great business model. If your ratio is 5:1 or higher, you could be growing faster and are likely under-investing in marketing.
What is a 'good' loan-to-value ratio? As a general rule of thumb, your ideal loan-to-value ratio should be somewhere under 80%. Anything above 80% is considered a high LTV. There are plenty of mortgages available for people with LTVs at 80%, 90%, or even 95%, but you'll be paying much more on interest.
According to HUD guidelines: “for purchase transactions, maximum LTV is 96.5% (the reciprocal of the 3.5% required investment).” This means the borrower can make a down payment as low as 3.5% of the purchase price, when using a government-insured FHA loan.
So, if you're looking at a property valued at, say, $200,000, a loan with a 50% LTV would be $100,000. The other half of the property's value would come from your down payment or equity you already have in the property if it's a refinancing scenario.
60% mortgages fall on the lower end of the LTV spectrum, with the lowest LTV ratio lenders offer being 50%. Having said this, a 60% LTV is the cutoff point that mortgage providers typically reach before not significantly improving upon a deal's terms anymore.
A good interest rate on a personal loan is anything lower than the market's average rate. But a good rate for you depends on your credit score. For example, if you have excellent credit, a rate below 11 percent would be considered good, while 12.5 percent would be less competitive.
A 55% LTV mortgage is at the low end of the typical range – usually, lenders offer LTVs between 50% and 95%. With a 55% LTV, lenders are taking on less of a risk, so you'll have a wide range of competitive options to choose from, with better deals and a lower total cost than you would with higher LTVs.
100k Salary How Much House Can I Afford: Example
Assuming a 20% down payment and a 4% interest rate on a 30-year fixed-rate mortgage, you could potentially afford a home priced around $400,000.
To purchase a $200,000 house, you need a down payment of at least $40,000 (20% of the home price) to avoid PMI on a conventional mortgage. If you're a first-time home buyer, you could save a smaller down payment of $10,000–20,000 (5–10%). But remember, that will drive up your monthly payment with PMI fees.
The Bottom Line. On a $70,000 salary using a 50% DTI, you could potentially afford a house worth between $200,000 to $250,000, depending on your specific financial situation.