Loan-to-Value (LTV)
Ratio prêt-valeur in French
Quick definition
Loan-to-value is the amount you owe against a property divided by the property's value, expressed as a percentage. It is the single number Canadian lenders use most to decide what you can borrow and on what terms.
The calculation
Divide the total borrowed against the property by the property's current value. A $400,000 mortgage on an $800,000 home is 50% LTV. Add a $100,000 line of credit and the combined LTV rises to 62.5%.
LTV is the mirror image of equity. At 50% LTV you have 50% home equity; at 80% LTV you have 20%. Lenders talk in LTV because their exposure is what they care about.
One detail matters at purchase time: lenders use the lesser of the purchase price and the appraised value, so a buyer who overpays does not get to borrow against the higher number.
The thresholds that actually change something
Canadian lending rules are built around a handful of LTV lines, and crossing one changes what is available to you rather than just the price.
| LTV | What it means |
|---|---|
| Above 80% | Mortgage default insurance is mandatory. Maximum 95% on the first $500,000 of price, sliding down above that. |
| 80% or below | Conventional, uninsured mortgage. No insurance premium. |
| 65% or below | The maximum for the revolving portion of a home equity line of credit on its own. |
| Above 80% combined | No HELOC room at all: total secured lending is capped at 80% of value. |
Why 80% is the line that matters most
Below 20% down payment, which is the same as above 80% LTV, mortgage default insurance becomes mandatory. The premium is a percentage of the loan, added to the mortgage and amortized over its life, and it protects the lender rather than you.
The same 80% line caps total secured borrowing later on. A HELOC has its own 65% ceiling for the revolving portion, and separately your mortgage plus HELOC together cannot exceed 80% of the home's value. Which of the two rules binds depends on how large your mortgage is.
Refinancing has its own limit: you generally cannot refinance above 80% LTV at all, so a homeowner with little equity cannot borrow against the home no matter how good their income is.
LTV moves without you doing anything
Every mortgage payment reduces the numerator, and any change in the property's value moves the denominator. Both directions matter.
In a rising market, LTV falls on its own and HELOC room appears without you paying down a cent. In a falling market it works in reverse, and a borrower who was comfortably inside a threshold can find they no longer are, which is when lenders can freeze or reduce a line of credit.
This is the practical reason not to plan around drawing the maximum available today. The limit is recalculated against a value that can move.
In Canada
The 65% and 80% HELOC limits are federal rules that apply at every regulated lender, so shopping around does not raise them. What varies between lenders is everything else: the stress test rate, income requirements and their own internal caps, some of which are stricter.
Mortgage default insurance is available only on homes priced under $1.5 million. Above that, 20% down is mandatory regardless of income, which makes 80% LTV a hard ceiling rather than a price point.
Lenders reassess value at renewal or when you apply for more credit, using an appraisal or an automated valuation. Your own estimate of what the house is worth is not what the calculation uses.
Worked example
Amir owns a home appraised at $800,000 with a $400,000 mortgage, so his LTV is 50% and his equity is $400,000. He wants a HELOC. The revolving cap allows 65% of $800,000, which is $520,000. The combined cap allows 80% of $800,000, which is $640,000, less his $400,000 mortgage, leaving $240,000. The smaller number wins, so his maximum HELOC is $240,000 and drawing all of it would put him at exactly 80% combined LTV.
Reviewed by Alexandre Bernier, CFP®, CIM®, PFP®·Updated September 2026