How is the Loan to Value (LTV) ratio calculated?

The LTV is calculated by dividing the Loan Amount by the lower of the Sales Price or the Appraisal Value as entered on the collateral details. For Fannie Mae and Freddie Mac transactions, this value must be truncated to two decimal places and then rounded up to the nearest whole percent when disclosed on such documents as the Uniform Underwriting and Transmittal Summary. While specific rounding requirements do not apply for FHA and Inhouse transactions, the same rounding will be applied when the LTV is disclosed for these transactions as is used for Fannie Mae and Freddie Mac transactions.

For FHA transactions, the LTV does not include the amount of upfront mortgage insurance premium (UFMIP) when Collect As is Add to Amount Requested.

For transactions with USDA Mortgage Insurance, the LTV is calculated by dividing the Loan Amount by the Appraisal Value entered on the collateral details. If the Appraisal Value is left blank, the Loan Amount is divided by the Sales Price.