What Is Loan-to-Value (LTV) Ratio and Why It Matters in 2025
Oct 15, 2025
TL;DR
LTV is the percentage of your property’s value that a lender will finance. In 2025, Indian banks typically cap it at 75–90 % depending on property type and borrower profile.
What Is LTV?
Your LTV = (Loan Amount ÷ Property Value) × 100.
If you buy a ₹80 lakh home and borrow ₹64 lakh, your LTV = 80 %.
A lower LTV means you’re investing more upfront and the bank sees lower risk.
Why It Matters in 2025
After Gujarat’s Jantri-rate hike raised official property valuations by up to 30 %, banks must recalculate LTV carefully. RBI guidelines still restrict lending above 90 % for properties under ₹30 lakh, but higher valuations can improve eligibility for mid-segment borrowers.
Example Table
Property Value | Loan Amount | LTV Ratio |
|---|---|---|
₹30 lakh | ₹27 lakh | 90% |
₹70 lakh | ₹56 lakh | 80% |
₹1.2 crore | ₹90 lakh | 75% |
Factors That Affect LTV
1. Credit Score & Income Stability – Higher score → higher LTV eligibility.
2. Property Type & Stage – Banks finance less for under-construction units.
3. Market Volatility – Rising repo rates or falling demand can tighten limits.
Common Misconceptions
❌ All banks offer the same LTV.
✅ Reality – RBI caps vary by ticket size.
❌ LTV equals loan eligibility.
✅ LTV gauges collateral value, not repayment ability.
FAQs
Q. Can my LTV change after approval? Yes, if property valuation shifts before disbursal.
Q. Is a higher LTV always better? No—higher LTV = less down-payment but higher EMI.
Q. How can I reduce LTV? Pay more upfront or add a co-applicant.
Key Takeaways
Keep LTV ≤ 80 % for better rates and faster approval.
RBI caps: ≤₹30 L → 90 %; ₹30–75 L → 80 %; >₹75 L → 75 %.
[👉 Check Your Eligibility Now](/tools/home-loan-eligibility)
Sources: RBI | NHB Residex | GujRERA | SLBC Gujarat