The Loan-to-Value (LTV) Disclosure Form is a critical document in mortgage lending that clearly lays out how much you’re borrowing relative to your home’s appraised value. It expresses your loan amount as a percentage of the property’s value, known as the LTV ratio. For example, borrowing $240,000 on a $300,000 home results in an 80% LTV.
Lenders use the LTV ratio to assess risk: a lower LTV indicates more equity and typically better loan terms, including the possibility of avoiding private mortgage insurance (PMI). The LTV Disclosure Form ensures this crucial information is transparent to borrowers before finalizing the loan.
This form appears in mortgage documents such as the Loan Estimate and Closing Disclosure, which provide full details of your loan terms. However, the LTV Disclosure focuses specifically on your loan’s proportional value to the home, its financial impact, and what it means regarding PMI and interest rates. For more information, see our glossary pages on Loan Estimate and Closing Disclosure.
Understanding your LTV can help you make better financial decisions:
- If your LTV is 80% or lower, you often won’t pay PMI, saving hundreds monthly.
- Higher LTVs mean more risk for lenders, which can result in PMI and higher interest rates.
The form typically includes:
- Loan amount
- Home’s appraised value
- Calculated LTV percentage
- Notes on PMI requirements and loan program eligibility
Keep in mind, LTV changes over time as you pay down your mortgage or as the property value changes. Knowing this can help you plan when you might be able to remove PMI.
If you disagree with your home’s appraisal, you have the right to request a review or reconsideration to potentially adjust your LTV. Always review and understand your LTV Disclosure Form fully, and discuss any questions with your lender to avoid surprises.
For detailed information on PMI, visit our Private Mortgage Insurance (PMI) guide.
Additional authoritative info on mortgage disclosures can be found on the Consumer Financial Protection Bureau website: Know Before You Owe.
With this disclosure, you gain transparency into how your mortgage loan is structured relative to your home’s value, empowering you to make informed decisions and manage your home financing wisely.