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Let's separate the phrase 'loan-to-value'. You have your 'loan', which is how much you will be borrowing from the lender. Then you have your 'value', which is the market price of what you will be purchasing. Compare these two with a simple equation and lenders can have a better idea of how much money you'll need for a down payment, contributing to how low or high risk your investment will be. If you provide a higher down payment, this will lower your loan-to-value ratio, making lending to you a more attractive option.
How Is LTV Calculated?
Typically lenders will divide your borrowed mortgage amount by the appraised market value of your property.
LTV = Mortgage Amount ÷ Appraised Property Value
For example: You have an $80,000 down payment for a home that costs $400,000. You're seeking a mortgage to cover the remaining $320,000.
LTV = $320,000 ÷ $400,000 = 0.80 or 80%
What's a Good Loan-to-Value Ratio?
Lenders differ in what's acceptable, but generally speaking an LTV ratio should be no higher than 80% for a residential mortgage. This would be similar to a 20% down payment on your home.
Of course there are certain circumstances which may still allow approval with a higher LTV:
Speaking to a licensed mortgage broker can help with getting you approved — they know which areas to focus on and what documents to submit on your behalf.
I Have an Acceptable LTV — Now What?
That's great! But having a good LTV ratio on its own isn't enough to guarantee approval. Lenders will also look at:
Whether you're looking to own a home for the first time, or you need to refinance or renew an existing mortgage, a licensed mortgage broker can guide you into a competitive mortgage deal.
To chat about your mortgage options, reach out for a no-obligation call!
The information provided on this page is for educational purposes and should not be implicitly relied upon. Conditions may apply and information may not be 100% up to date. Contact a licensed mortgage professional for the most current conditions and program offerings.
Have questions about loan-to-value (ltv) ratio: what it means for your mortgage approval?
Call for a free, no-obligation consultation, or run the numbers first with the mortgage calculators.
(604) 780-5173About the author
Kyle Benzies, Licensed Mortgage Broker
I'm a licensed mortgage broker serving clients across British Columbia, Alberta, and Ontario. I work with a network of over 100 lenders — banks, credit unions, monoline, and alternative lenders — to find financing that fits each client's situation rather than a single institution's product shelf. Everything I publish here is written to explain how Canadian mortgage lending actually works, in plain language.
Published December 6, 2025
