How to Compute LTV on a VA Loan

By Mark Kennan

The U. S. Department of Veterans Affairs offers qualifying veterans the opportunity to have their loans backed by the government. This makes their mortgages more attractive to lenders and offers a no-down payment option. However, veterans have the option to make a down payment, which can decrease the amount of the funding fee, depending on the loan to value ratio, or LTV. The LTV compares the amount you borrowed to the value of your home.

Check your loan documents to determine the amount you are taking out on your VA loan.

Divide the amount you are borrowing by the amount your home is worth. For example, if you borrow $300,000 and your home is worth $305,000, you would divide $300,000 by $305,000 to get about 0.9836.

Multiply the result from step 2 by 100 to convert from a decimal to a percentage. Completing the example, you would multiply 0.9836 by 100 to get 98.36 percent for the loan to value ratio.

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