What loan-to-value means in Canadian lending
Loan-to-value, commonly written as LTV, compares a mortgage balance with the property value a lender accepts for underwriting. The percentage shows how much of the home’s value is represented by secured debt.
For example, a $390,000 first mortgage on a home valued at $650,000 produces an LTV of 60%:
$390,000 ÷ $650,000 × 100 = 60%
This calculator displays several related ratios rather than one figure alone. It separates the first mortgage, other drawn secured balances and the full authorized HELOC limit so you can see how each component affects the result.
Three ratios that describe secured borrowing on the same property
First-mortgage LTV
This ratio uses only the outstanding balance of the first mortgage. It is helpful when reviewing the position of that specific loan.
Combined LTV based on amounts currently owed
Combined LTV includes the drawn balances of the first mortgage, second mortgage, HELOC and any other debt secured against the property. It reflects the debt that is currently outstanding.
Authorized secured exposure
A HELOC may have a limit greater than the amount currently borrowed. When estimating room for additional secured financing, lenders may consider the authorized credit available under that facility—not only today’s drawn balance.
The calculator therefore reports an additional ratio using the full HELOC limit. This is a conservative planning measurement; actual lender treatment depends on the institution and the transaction.
Home equity is not the same as borrowing capacity
Estimated home equity is calculated by subtracting outstanding secured debt from the property value. Using the earlier example, if the only secured debt is a $390,000 mortgage on a $650,000 property, gross equity is approximately $260,000.
That does not mean the homeowner can automatically borrow another $260,000. Available financing may be limited by LTV boundaries, income, existing debts, credit history, the mortgage stress test, property characteristics and the purpose of the loan.
An unused HELOC limit is another important distinction. Undrawn credit does not reduce current dollar equity because it has not been borrowed. However, the authorized facility may reduce a lender’s willingness or ability to approve additional secured credit.
Revolving credit near 65% LTV
OSFI expects applicable federally regulated institutions to keep the non‑amortizing HELOC component at or below 65% of the property’s lending value.
Total secured borrowing near 80% LTV
Conventional mortgage and combined‑loan planning commonly uses 80% LTV as an upper boundary. A lender may impose a lower limit after reviewing the application.
Borrowing between 65% and 80%
Under OSFI’s combined‑loan treatment, borrowing above the 65% revolving boundary should be amortizing and non‑readvanceable rather than reusable HELOC credit.
Purchase mortgages above 80%
An eligible home‑purchase mortgage may exceed 80% LTV when approved mortgage default insurance is obtained. Insurance eligibility depends on the borrower, property, purchase price and current program rules.
Why the 65% and 80% figures should not be confused
The two percentages address different parts of secured borrowing. The 65% figure concerns the non‑amortizing revolving HELOC component. The 80% figure relates to the wider secured arrangement in a conventional lending context.
This means a homeowner should not assume that an 80% combined limit can consist entirely of revolving credit. In an applicable combined mortgage‑and‑HELOC plan, the portion above the revolving boundary must be structured so that principal is repaid rather than automatically becoming available to borrow again.
These figures are regulatory or product boundaries, not personal entitlements. A lender may approve less—or decline the application—after reviewing affordability, credit, valuation and property information.
For authoritative background, consult the Financial Consumer Agency of Canada’s HELOC guide and OSFI’s residential mortgage underwriting guidance .
When a purchase mortgage can exceed 80% LTV
A mortgage above 80% LTV is commonly called a high‑ratio mortgage. For an eligible purchase, mortgage default insurance can permit a smaller down payment than would be required for a conventional uninsured mortgage.
A 5% down payment corresponds to a 95% initial LTV before any financed insurance premium. Canada uses tiered minimum down‑payment rules, and properties at or above the applicable insured‑price limit are not eligible for standard borrower‑paid mortgage insurance.
Mortgage default insurance protects the lender against borrower default. It does not protect the homeowner against falling property values or an inability to make payments. The premium is commonly paid by the borrower and may be added to the mortgage.
Check the current CMHC mortgage loan insurance requirements and confirm the rules with the lender or insurer before relying on a high‑ratio estimate.
Why LTV matters when arranging a mortgage
LTV helps lenders understand how much secured debt is being placed against the property. The ratio can influence mortgage insurance requirements, available products, refinancing room and access to revolving home‑equity credit.
A lower LTV normally means that a larger share of the property value is equity. It does not guarantee approval or a particular interest rate. Borrower income, debt‑service ratios, credit, mortgage purpose, documentation and property acceptability remain important.
LTV can also affect future flexibility. A mortgage positioned close to a lending boundary may leave little room to refinance if the property value falls or the homeowner needs additional secured financing.
How repayments and property prices change LTV
LTV usually falls when mortgage principal is repaid and the accepted property value remains unchanged. It may fall faster if principal declines while the property value rises.
The reverse is also possible. Additional secured borrowing or a lower appraisal can increase LTV. For example, $480,000 of secured debt represents 80% LTV on a $600,000 property, but the same debt represents approximately 87.27% if the accepted value falls to $550,000.
Use the property‑value sensitivity table to examine this relationship. It keeps the proposed debt unchanged while applying several possible property values, making the effect on LTV and equity easier to see.
To explore available secured borrowing and possible payments, use the Canada home equity calculator . For purchase‑related cash requirements, use the Canada down payment calculator .
Practical questions about LTV in Canada
My mortgage is $390,000 and my home is worth $650,000. What is my LTV
Divide $390,000 by $650,000 and multiply by 100. The resulting first‑mortgage LTV is 60%.
Why is my combined LTV higher than my mortgage LTV
Mortgage LTV considers the first mortgage alone. Combined LTV also includes other outstanding debt secured against the property, such as a second mortgage or drawn HELOC balance.
Does unused HELOC credit reduce my current home equity
No. Undrawn credit is not currently owed, so it does not reduce gross dollar equity. The authorized limit may still be considered when a lender calculates room for additional secured borrowing.
Can my LTV rise even if I do not borrow more money
Yes. If the lender accepts a lower property value, the same outstanding debt will produce a higher LTV. This is why the calculator includes a property‑value sensitivity table.
Does an LTV below 80% guarantee an uninsured mortgage
No. It may satisfy one common loan‑to‑value condition, but approval still depends on income, debts, credit, qualification rules, the property and the lender’s policies.
Can an insured home‑purchase mortgage have a 95% LTV
It may be possible for an eligible purchase where a 5% minimum down payment applies. Tiered down‑payment rules, price limits and other insurance requirements can reduce the available maximum in other cases.
Is 65% the maximum for a mortgage and HELOC combined
No. The 65% figure applies to the revolving, non‑amortizing component under federal guidance. The total secured arrangement may extend farther—commonly up to 80%—when the portion above 65% is amortizing and non‑readvanceable and the application is approved.
Which property value should I enter
Use a reasonable current estimate for planning. For an actual application, the lender determines the accepted value and may consider the purchase price, an appraisal, an automated valuation or another approved method.