What is loan-to-value (LTV), and why it matters for your home loan
In short: LTV is the percentage of your property’s value that a lender will finance. Indian lenders usually fund 75–90% of it, depending on the loan size and your profile. The rest is your down payment.
What is LTV?
LTV = (loan amount ÷ property value) × 100
If you buy an ₹80 lakh home and borrow ₹64 lakh, your LTV is 80%.
A lower LTV means you put in more of your own money upfront, and the lender sees less risk.
Why it matters now
After Gujarat’s Jantri-rate revision raised official property valuations by up to 30%, lenders have to recalculate LTV carefully. RBI rules still cap lending at 90% for loans up to ₹30 lakh, but higher official valuations can improve eligibility for mid-segment borrowers.
RBI’s limits, with examples
| Property value | Loan amount | LTV |
|---|---|---|
| ₹30 lakh | ₹27 lakh | 90% |
| ₹70 lakh | ₹56 lakh | 80% |
| ₹1.2 crore | ₹90 lakh | 75% |
RBI sets the ceiling by loan size: up to ₹30 lakh, a lender may fund up to 90%; from ₹30 lakh to ₹75 lakh, up to 80%; above ₹75 lakh, up to 75%.
What affects the LTV you’re offered
- Credit score and income stability. A stronger profile can get you closer to the ceiling.
- Property type and stage. Lenders often fund less for under-construction homes.
- The market. Rising repo rates or falling demand can make lenders more cautious.
Common misconceptions
“All lenders offer the same LTV.” They don’t. RBI sets a ceiling, and each lender decides how close to it they’ll go.
“LTV is the same as loan eligibility.” It isn’t. LTV measures the loan against the property’s value; eligibility also depends on whether you can repay.
Questions
Can my LTV change after approval? Yes, if the property’s valuation changes before disbursal.
Is a higher LTV always better? No. A higher LTV means a smaller down payment, but a bigger loan and a higher EMI.
How can I lower my LTV? Put more money down, or add a co-applicant to strengthen the application.
Key takeaways
- Keeping LTV at or below 80% usually gets you better rates and faster approval.
- RBI ceilings: up to ₹30 lakh, 90%; ₹30–75 lakh, 80%; above ₹75 lakh, 75%.
Sources: RBI, NHB Residex, GujRERA, SLBC Gujarat.