Loan Surfer Home Buyer Guide


UNDERSTANDING LOAN-TO-VALUE (LTV) LTV expresses how much you’re borrowing compared to the value of the home. A lower LTV is more favorable because it represents less risk to the lender. This ratio is calculated as:

UNDERSTANDING DEBT-TO-INCOME (DTI) DTI shows how much debt you have compared to your monthly income. The lower your DTI, the better your chances are for qualifying for a loan. The ratio is calculated as:

Amount Borrowed

Total Recurring Monthly Debt



Appraised Value of the Property

Gross Monthly Income

For example, let’s say you need to borrow $90,000 to purchase a $100,000 home. Your LTV ratio would be 90%.

For example, let’s say your total monthly debts add up to $2,000, and your gross monthly income is $6,000. Your DTI ratio would be 33%.



=90% LTV

=33% DTI



The higher your down payment, the lower your LTV. This is important because a LTV higher than 80% (in other words, a down payment less than 20%) typically means you’ll have to pay mortgage insurance. Jump to page 2.2 to learn more about how mortgage insurance works.

Remember, your monthly housing expense (not including other debts) should not exceed 28% of your gross monthly income.

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