What does LTV stand for in real estate lending?

• A. Lease-To-Value ratio
• B. Lien-To-Value ratio
• C. Loan-To-Value ratio
• D. Loan-Term Value

Answer: (C)

The main idea is measuring how large the loan is compared to what the property is worth. LTV, or Loan-To-Value ratio, is calculated by dividing the loan amount by the property's value (usually the lower of the appraised value or purchase price). Lenders look at this figure to gauge risk: a higher LTV means the borrower has less equity and the lender faces more risk if the loan goes into default, which can lead to higher interest rates, stricter terms, or the requirement for mortgage insurance. Other terms like Lease-To-Value or Lien-To-Value aren’t standard metrics for evaluating a loan against property value, and Loan-Term Value isn’t a recognized lending measure. So the correct term is Loan-To-Value ratio.