The loan to value (LTV) ratio is a percentage of value which you are wanting to obtain financing for. For example if you are wanting a loan of 90,000 and the value of a property is $100,000 than it is a 90% loan to value ratio. LTV is one of the factors used in determining  whether or not to approve the mortgage financing. Additionally, LTV determines whether you must pay Private Mortgage Insurance (PMI).

The appraisal plays an important factor for the LTV. An appraisal estimates the value of the property. The higher the appraisal comes in the lower the LTV will be.

With a VA loan a borrower can obtain financing for a 100% of the loan to value ratio. For example, if the value of a property is $100,000 than the borrower can obtain a loan for $100,000. VA loans don’t require a down payment which makes it easier for veterans to obtain a mortgage. VA loans also don’t require Private mortgage insurance (PMI).