Why LTV matters
Loan-to-value ratio compares the loan amount with the purchase price. Lower LTV can affect approval, mortgage insurance and rate offers.
Example
For a 400,000 purchase with a 20% down payment target, the down payment is 80,000 and the starting loan amount is 320,000. If available cash is 60,000, the cash gap is 20,000 before closing costs.
Common mistakes
Do not spend every available cash unit on the down payment if closing costs, moving costs, repairs or emergency savings still need funding.
Limitations
This does not include closing costs, taxes, appraisal gaps, mortgage insurance, grants, seller credits or local lending rules.
Last reviewed: 2026-05-17