It is the loan balance divided by the appraised value or the price, whichever the lender uses. The more you put down, or the more equity you have, the lower it is.
Why it matters
A lower ratio means less risk for the lender, which can open more programs and better pricing, and on a conventional loan it decides whether mortgage insurance applies. Each program sets its own limits.
Where you meet it
On purchases, refinances and every loan against your home equity.
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