What is a good LTV for a rental property?

There is no single good number. Lenders set maximums that vary by loan type and property, so ask what yours is. A lower LTV leaves more equity and a smaller payment.

Is LTV based on purchase price or appraised value?

The appraised value is the standard measure, and on a purchase many lenders use the lower of price and appraisal. Confirm with your lender.

How do I lower my LTV?

Pay down the loan, put more down on a purchase, or wait for a higher appraised value. Improving the property can raise value, but only an appraisal confirms it.

Loan-to-Value (LTV) on a Rental Property

Loan-to-value is the loan balance divided by the property's value. A $450,000 loan on a $600,000 property is 75% LTV. Lenders use it to decide how much they will lend, and you can use it to see how much equity you hold. The value in the formula is the lender's appraised value, which may differ from the price you paid.

The LTV formula

The CFPB defines loan-to-value as a measure comparing the amount you are financing with the appraised value of the property. As a formula: LTV equals loan balance divided by value, shown as a percent.

Example a made-up rental has an appraised value of $600,000 and a loan balance of $450,000. $450,000 divided by $600,000 is 0.75, or 75% LTV. Equity is the other 25%, which is $150,000.

LTV when you buy

On a purchase, lenders commonly measure against the lower of the price and the appraised value. Confirm that with your lender, because it changes your down payment when the appraisal comes in under the price.

Example a made-up purchase at $620,000 appraises at $600,000. At a 75% maximum LTV measured on the lower value, the loan can be up to $450,000. You would put down $170,000 ($620,000 less $450,000), not the $155,000 a 75% loan on the price would have needed.

Combined LTV with a second loan

If a property has a second loan or a line of credit secured by it, lenders add all the balances before dividing. That is combined LTV, often shortened to CLTV.

Example the same made-up $600,000 property carries the $450,000 first loan and a $60,000 line of credit. Combined balance is $510,000. $510,000 divided by $600,000 is 85% combined LTV.

How your LTV changes over time

Two things move it. Each payment reduces the balance a little, slowly at first on a long loan, so LTV drifts down. A change in the property's value moves it too, which you only learn from a new appraisal. Your own estimate of what the property would sell for is not a number a lender will use.

Example the made-up loan above is paid down to $430,000, and a new appraisal says the property is worth $640,000. LTV is $430,000 divided by $640,000, about 67%.

This is why lenders order a new appraisal before a cash-out loan. See cash-out refinance rules for rentals.

What LTV does not tell you

LTV measures how much of the property is borrowed. It says nothing about whether the rent covers the payment. A 60% LTV property can lose money each month, and an 80% LTV property can make money. Pair it with DSCR and with the debt yield.

Questions to ask your lender about LTV

Which value do you use: the purchase price, the appraised value, or the lower of the two?
Is the maximum LTV different for a one-unit rental, a two-to-four unit building and a larger building?
Is the maximum different for a purchase, a rate-and-term refinance and a cash-out refinance?
Do you count a second loan or a line of credit in the limit?

Limits differ by lender and loan type and can change, so compare written terms from more than one lender instead of relying on a rule of thumb you read online. A lower LTV does not guarantee approval, and a higher LTV is not always refused; the lender also looks at the rent, your credit and your cash reserves. Write down the answers next to each property you are comparing so you can see how the down payment changes with the lender.

How DoorKeeping fits

DoorKeeping does not appraise property or work out loan amounts. It keeps each property's mortgage balance and payments in that property's books, so the current loan balance you plug into this formula is one question to Claude or ChatGPT instead of a search through statements. It costs $2 per unit per month.

Sources

CFPB, What is a loan-to-value ratio?, read Oct 31, 2026
Fannie Mae Selling Guide, B2-1.1-01 Occupancy Types, read Oct 31, 2026

Questions

What is a good LTV for a rental property?: There is no single good number. Lenders set maximums that vary by loan type and property, so ask what yours is. A lower LTV leaves more equity and a smaller payment.
Is LTV based on purchase price or appraised value?: The appraised value is the standard measure, and on a purchase many lenders use the lower of price and appraisal. Confirm with your lender.
How do I lower my LTV?: Pay down the loan, put more down on a purchase, or wait for a higher appraised value. Improving the property can raise value, but only an appraisal confirms it.