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Plan carefully before you build. Take the time to understand your lot, the soil, and local regulations. Next select a plan that works for you and your site. Then look at ways to finance your dream home from conception through construction.
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| | BobVila.com > Channels > Finance > All Tips > Loan-to-Value Ratio
 Loan-to-Value Ratio
The loan to value ratio (LTV) is the amount of money you borrow compared with the price or appraised value of the home you are purchasing. Each loan has a specific LTV limit. For example: with a 95% LTV loan on a home priced at $50,000, you could borrow up to $47,500 (95% of $50,000), and would have to pay $2,500 as a down payment. The LTV ratio reflects the amount of equity borrowers have in their homes. The higher the LTV ratio, the less cash homebuyers are required to pay out of their own funds. So, to protect lenders against potential loss in case of default, higher LTV loans (80% or more) usually require a mortgage insurance policy.
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