The loan-to-value ratio (LTV) is a financial term that helps lenders evaluate risk when financing a real estate loan. The ratio is usually expressed as a percentage that represents the difference between the value of the asset and the amount of the loan. People who put 20 percent down on a property have an LTV of 80 percent. Putting down larger amounts for the down payment reduces the risk that lenders make because borrowers typically default less if they have a larger financial investment in property. The LTV also impacts how long borrowers need to carry private mortgage insurance (PMI). When the LTV is 78 percent or less, borrowers do not need PMI and can ask their lenders to drop the insurance. By law, they have to unless the payment record of the borrower is poor, in which case the lender can require PMI regardless of the LTV.