LTV Ratio
Definition
Loan-to-Value ratio — the percentage of the property/asset value that a bank will finance. For home loans: up to 90% for properties ≤₹30L, 80% for ₹30-75L, and 75% for >₹75L. The remaining amount is your down payment.
Why is LTV Ratio Important?
When applying for a loan in India—whether it's a home loan, personal loan, or car loan—the concept of LTV Ratio plays a significant role in determining your total borrowing cost. Lenders use factors like this to assess credit risk, determine eligibility, and structure your EMI schedule. Understanding this term helps borrowers negotiate better interest rates, choose the right loan product, and save money over the loan tenure.
For accurate financial planning, it is highly recommended to use our free online calculators to see how LTV Ratio impacts your specific scenario. Real-time calculations provide clarity on monthly outgoes, principal vs. interest components, and long-term financial burdens.
What is LTV Ratio?
Loan-to-Value (LTV) ratio is the percentage of a property or asset's value that a bank is willing to finance. The remaining must be funded by the buyer as a down payment. RBI regulates maximum LTV ratios for home loans in India.
RBI LTV Norms for Home Loans
| Property Value | Maximum LTV | Min Down Payment |
|---|---|---|
| Up to ₹30 lakhs | 90% | 10% |
| ₹30 lakhs – ₹75 lakhs | 80% | 20% |
| Above ₹75 lakhs | 75% | 25% |
Why LTV Matters
- Lower LTV = lower risk for the bank → better interest rates for you
- Higher LTV = less down payment needed but higher EMI and total interest
- LTV above 80% may require mortgage insurance in some cases