Posted by Paul Ness, MAI on May 26, 2000 at 08:02:55:
Typically a lender will have “loan-to-value” limits on the amount of a loan which is secured by real estate. If a property is valued at $100,000 and the required “loan-to-value” ratio is 75%, the lender will loan up to $75,000. In a purchase situation, lenders will often have a policy that says the LTV ratio will be based on either the purchase price or appraised value, whichever is lower.