How does loan-to-value affect the mortgage rate I'm offered?
It's one of the biggest factors. Loan-to-value compares what you borrow with what the home is worth, and the lower it is, the better your rate usually is. Pricing steps up at set bands, and 80% is the big one: above it, the rate usually rises, and a conventional loan generally needs private mortgage insurance. Your credit score, loan term and property type work together with it.
Last updated September 29, 2026What is loan-to-value, and why does it move my rate?
Loan-to-value (LTV) is your loan amount divided by the home's appraised value. If you have a first mortgage plus a home equity loan or line, lenders look at combined loan-to-value (CLTV), all the loans against the home together. A higher ratio means less equity cushion, so the lender takes more risk if values fall or payments stop. Lenders price that risk in, which the CFPB calls risk-based pricing: riskier loans get a higher rate or added fees.
Are there specific points where my rate jumps?
Yes. Pricing doesn't slide smoothly; it moves in steps at LTV bands. The 80% line matters most. Cross above it and the rate usually goes up, and on a conventional loan you'll generally pay private mortgage insurance too, a monthly cost on top of the rate. Coming in below the next band down can improve pricing again.
What else combines with LTV?
- Credit score: on the same pricing grid, a lower score and a higher LTV add together, so the combination costs more than either alone.
- Loan term: a 15-year loan usually prices lower than a 30-year loan on the same balance, though the monthly payment is higher.
- Property type: a home you live in gets higher LTV limits and better pricing than a second home or investment property.
It depends on your situation:
- Your CLTV is well below 80%: you're generally in the better pricing tiers.
- You're right at or just over 80%: expect a higher rate, and on a conventional loan, mortgage insurance.
- Your credit score is on the lower side: the LTV effect is usually bigger, because the two stack.
- You're choosing a loan term: a shorter term usually prices lower but costs more each month.
| Lower LTV | Better pricing tiers |
|---|---|
| Above 80% LTV | Rate usually rises; conventional loans generally need mortgage insurance |
| Lower credit score plus higher LTV | Adjustments add together |
| 15-year versus 30-year | The shorter term usually prices lower |
| Primary residence versus investment property | The primary residence gets better limits and pricing |
Home values of online rate shoppers (national median)
| Median home value | $350,000, as of Oct 1, 2026 |
|---|---|
| Rate-shopper observations | 513,104, as of Oct 1, 2026 |
Source: FreeRateUpdate rate-shopper transactions (national, rolling 12-month window)
Rates in our network
| As low as 30-year fixed purchase rate | 6.374% (APR 6.529%), as of Oct 21, 2026 |
|---|---|
| As low as 20-year fixed purchase rate | 6.125% (APR 6.418%), as of Oct 21, 2026 |
| As low as 15-year fixed purchase rate | 5.749% (APR 6.073%), as of Oct 21, 2026 |
| As low as 10-year fixed purchase rate | 5.625% (APR 5.984%), as of Oct 21, 2026 |
Source: advertised rates verified in the FreeRateUpdate lender network (as low as, not market averages)
Related questions
Sources
- https://www.consumerfinance.gov/ask-cfpb/what-is-a-loan-to-value-ratio-and-how-does-it-relate-to-my-costs-en-121/
- https://www.consumerfinance.gov/ask-cfpb/what-is-risk-based-pricing-en-767/
- https://www.ncsha.org/wp-content/uploads/2015/04/llpa-matrix-1.pdf
- https://singlefamily.fanniemae.com/media/20786/display
- https://www.nerdwallet.com/mortgages/calculators/15-or-30-year-mortgage
- https://www.freddiemac.com/pmms
- https://www.bankrate.com/home-equity/heloc-rates/
Sourced from licensed loan officers and brokers in the FreeRateUpdate network.
Educational information only, not individualized financial or legal advice. Program details and rates change; verify current terms with a licensed loan officer before making a decision.