African-American female banker meeting with client
African-American female banker meeting with client

why should I care about loan-to-value?

If you’re considering a home equity line of credit, you need to know how loan-to-value impacts how much you can borrow. 

If you’re considering a home equity line of credit (HELOC), you first need to understand the concepts of home equity and loan-to-value (LTV), and how they impact the amount you can borrow.

Essentially, LTV will impact the maximum amount you can borrow when applying for a home equity line of credit or home equity loan solution.

What is home equity? 

Simply put, home equity is the current market value of your property minus what you owe on the mortgage. When you purchase a home, the bank that issues your loan takes a mortgage as collateral against the value of the home, less any down payment. As you make your monthly payments, the amount of the mortgage goes down, which increases your equity. 

To determine the amount of equity you have in your home, simply subtract the remaining amount on your mortgage from the current value of your home. For instance, if your home has an appraised value of $200,000 and your current mortgage is $120,000, your home equity is $80,000.

What is loan-to-value ratio? 

Loan-to-value ratio, or LTV, is a percentage of the home loan compared to the appraised value of your home. Homeowners can easily calculate the LTV ratio by dividing the current mortgage amount for their home by the appraised property value. So, for a home with a mortgage of $120,000 and an appraised property value of $200,000, the LTV is 60% ($120,000 ÷ $200,000 = 60% LTV ratio).

When you apply for a home equity line of credit, First Financial Bank will determine the loan-to-value ratio for your home and, upon approval, issue you a line of credit based on your home’s equity. The size of your credit line through a HELOC is determined by your amount of equity, the current value of your home or a mixture of the two.  

Not sure what your house is worth? Check out Zillow for a quick estimate. 

How does LTV impact me?

Loan-to-value doesn’t have to be intimidating. Essentially, LTV will impact the maximum amount you can borrow when applying for a home equity line of credit or home equity loan solution. Learn more about how LTV is calculated with our guide to HELOC.

Are you ready to apply?

Home equity loans provide the perfect opportunity to consolidate debt, fund your dreams, pay for renovations to your home, and more.

At First Financial Bank, we offer a range of home equity loan solutions and have made it easier than ever to apply for a home equity line of credit, or a home equity installment loan. When you apply for a home equity loan solution with us, we will waive closing costs and approval fees, saving you up to $1,000 in up-front costs. 

First Financial Bank currently lends in Ohio, Kentucky, Indiana, and Illinois. If you and the property are in any of those four states, you can apply now for a home equity line of credit.


The information on this page is accurate as of January 2021 and is subject to change. First Financial Bank is not affiliated with any third-parties or third-party websites mentioned above. Any reference to any person, organization, activity, product, and/or service does not constitute or imply an endorsement. By clicking on a third-party link, you acknowledge you are leaving bankatfirst.com. First Financial Bank is not responsible for the content or security of any linked web page. Member FDIC / Equal Housing Lender.

All loans subject to credit review and approval.

You’re about to leave bankatfirst.com

First Financial Bank is not affiliated with any third-party websites. Any reference to any person, organization, activity, product, and/or services does not constitute or imply an endorsement. First Financial Bank is not responsible for the content or security of any linked web page.