What Is Loan-to-Value (LTV) Ratio and Why It Matters in 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

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