Loan to value is the percentage of the home’s value that you are borrowing. As a general rule of thumb purchase price is used for loan to value when purchasing and appraised value is used when refinancing. The higher the loan to value, the harder it usually is to qualify for the loan. A person who wants to do a no down payment purchase would need 100% loan to value. This represents a greater risk to the lender and therefore the loan is harder to qualify for than a loan for 80% of the purchase price. As a general rule the higher loan to value you need, the harder it is to qualify. Additionally higher loan to value loans are usually going to be more expensive in terms of interest rates and fees than the lower loan to value loans.

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