What Does LTV Stand for?

Loan to Value | What Does LTV Stand for?

Land Loans

What does LTV stand for? What does it mean and what priority does it hold to my land loan?

The term LTV stands for Loan To Value, it is very important in determining if you can qualify for a land loan. LTV represents the amount of loan against the property versus the appraisal value or purchase price. It is represented in percentage form.

For example, land is purchased for $1,000,000. The actual land loan amount is $700,000. To find the LTV , simply divide $700,000 by $1,000,000. This puts the loan to value at 70%.

 

However, some land purchases could be higher than what the appraisal will represent as a value. In that case, the L.T.V. will be determined on the appraisal value. For example, land is purchased at $500,000. The appraisal valued the land at $450,000. A down payment of $100,000 was put down leaving a $350,000 land loan. The L.T.V. is then determined by dividing the $350,000 by the $450,000 appraisal value instead of the purchase price of $500,000. This L.T.V. is then at 77%

 

A standard loan to value accepted by most land loan lenders is between 60% to 80% for land loans. This is extremely important to land loan lenders. This provides the lender with a guarantee of value to the money being loaned for that land. There are definitely other very important factors other than L.T.V. that determine qualification for a land loan, but knowing and understanding L.T.V. will make your land loan process much easier.

 

This explanation answers the question of what does ltv stand for and much more. LandLoanSpecialists.com provides land loans, farm loans, ranch loans, recreational land loans, hobby farm loans and raw land loans. With LandLoanSpecialists.com, you will receive free pre-approval, low long term rates and experts with answers to all of your land loan questions. Please visit our website at LandLoanSpecialists.com and contact us by calling 1-888-744-4524

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