What Is Loan-to-Value (LTV)?
Loan-to-value (LTV) is the ratio of your mortgage amount to the property’s appraised value, expressed as a percentage. It tells a lender how much of the property they would own if you defaulted.
$$\text{LTV} = \frac{\text{Mortgage Amount}}{\text{Property Value}} \times 100$$
Example: You buy a home for $600,000 with a $120,000 down payment (20%) and a $480,000 mortgage.
$$\text{LTV} = \frac{$480{,}000}{$600{,}000} \times 100 = 80%$$
LTV Calculator
Use the table below to find your LTV based on your down payment percentage:
| Down Payment | Down Payment % | LTV | CMHC Required? | CMHC Premium |
|---|---|---|---|---|
| $25,000 on $500K | 5% | 95% | Yes | 4.00% |
| $37,500 on $500K | 7.5% | 92.5% | Yes | 3.10% |
| $50,000 on $500K | 10% | 90% | Yes | 3.10% |
| $75,000 on $500K | 15% | 85% | Yes | 2.80% |
| $100,000 on $500K | 20% | 80% | No | 0% |
| $125,000 on $500K | 25% | 75% | No | 0% |
| $150,000 on $500K | 30% | 70% | No | 0% |
| $200,000 on $500K | 40% | 60% | No | 0% |
How to Calculate LTV: Step-by-Step
Buying a home
- Determine the property value — Use the lower of the purchase price or appraised value
- Subtract your down payment to find the mortgage amount
- Divide mortgage by property value
- Multiply by 100
Example: $750,000 home, $150,000 down payment
$$\text{Mortgage} = $750{,}000 - $150{,}000 = $600{,}000$$ $$\text{LTV} = \frac{$600{,}000}{$750{,}000} \times 100 = 80%$$
Refinancing or calculating current LTV
- Get your current mortgage balance (from your lender portal or mortgage statement)
- Get the current appraised value (from a recent appraisal or MPAC estimate)
- Divide and multiply
Example: Remaining balance $320,000, home now worth $550,000
$$\text{LTV} = \frac{$320{,}000}{$550{,}000} \times 100 = 58.2%$$
HELOC combined LTV (CLTV)
If you have both a mortgage and a HELOC:
$$\text{CLTV} = \frac{\text{Mortgage Balance} + \text{HELOC Balance}}{\text{Property Value}} \times 100$$
Canadian lenders cap combined LTV for HELOCs at 80% of the property value (65% for the HELOC portion + up to 15% via mortgage).
LTV Thresholds That Matter in Canada
| LTV | What Changes |
|---|---|
| Above 80% | CMHC/Sagen/Canada Guaranty mortgage insurance mandatory |
| 80% | Boundary between insured and conventional mortgage |
| 75% | Many lenders offer improved rates; HELOC available to 65% |
| 65% | Best rates from most lenders; maximum HELOC ratio |
| Below 65% | Maximum flexibility; best negotiating position |
CMHC Insurance Premiums by LTV
If your LTV exceeds 80%, CMHC default insurance is mandatory. The premium is added to your mortgage:
| LTV Range | Down Payment | CMHC Premium |
|---|---|---|
| 90.01% – 95% | 5.00% – 9.99% | 4.00% of mortgage |
| 85.01% – 90% | 10.00% – 14.99% | 3.10% of mortgage |
| 80.01% – 85% | 15.00% – 19.99% | 2.80% of mortgage |
| 80% and below | 20%+ | 0% — no insurance required |
Example: $475,000 mortgage at 95% LTV → CMHC premium = $475,000 × 4.00% = $19,000 (added to your mortgage, so total mortgage = $494,000).
The CMHC premium is paid to the insurer but your monthly payment covers it because it’s added to the mortgage principal.
LTV by Mortgage Type in Canada
| Mortgage Type | Maximum LTV | Notes |
|---|---|---|
| Insured (owner-occupied) | 95% | Home under $1M; CMHC required |
| Conventional (owner-occupied) | 80% | No CMHC; must qualify at stress test |
| Investment property (rental) | 80% | No CMHC available for rentals |
| Commercial property | Typically 65%–75% | Varies significantly by lender |
| HELOC standalone | 65% | Maximum per OSFI guidelines |
| HELOC + mortgage combined | 80% | Combined limit per OSFI B-20 |
| Refinance | 80% | Maximum for refinancing in Canada |
How LTV Affects Your Mortgage Rate
In Canada, the relationship between LTV and rate is counter-intuitive at the high end:
| LTV | Type | Rate Impact |
|---|---|---|
| 95% (insured) | High-ratio | Often lower rate — CMHC removes lender’s default risk |
| 80%–85% (insured) | High-ratio | Often lower rate vs. conventional |
| 80% (conventional) | Conventional | Moderate rate — stress test required |
| 75% (conventional) | Conventional | Slightly better rate than 80% |
| 65% (conventional) | Conventional | Best uninsured rates; HELOC available |
| Below 65% | Conventional | Strongest negotiating position |
The reason insured mortgages often have lower rates: the lender has no default risk (CMHC bears it). The borrower pays the CMHC premium, but the lender can offer better pricing.
LTV for Refinancing
When refinancing, Canadian lenders cap the mortgage at 80% of the current appraised value. This is stricter than the US (which allows up to 97.75% on some programs).
How much can I borrow when refinancing?
$$\text{Max refinance} = \text{Appraised Value} \times 80%$$
Example: Your home is worth $750,000 and your current mortgage balance is $350,000.
$$\text{Max refinance} = $750{,}000 \times 80% = $600{,}000$$ $$\text{Cash you can pull out} = $600{,}000 - $350{,}000 = $250{,}000$$
This is relevant for debt consolidation, home renovation financing, or investment.
LTV vs. Equity
LTV and equity are inverses:
$$\text{Equity %} = 100% - \text{LTV %}$$
| LTV | Equity |
|---|---|
| 95% | 5% |
| 80% | 20% |
| 65% | 35% |
| 50% | 50% |
When people say they have “30% equity,” they mean their LTV is 70%.