# What is the Loan-to-Value (LTV) ratio, and how does it impact my ability to refinance?

> The Loan-to-Value (LTV) ratio plays a critical role in the refinancing process.

Category: Refinance
Last verified: 2026-04-14
Source: https://ratellow.com/faqs/refinance/what-is-the-loan-to-value-ltv-ratio-and-how-does-it-impact-my-ability-to-refinance

## Answer
Generally, a lower LTV (indicating more equity) translates to more favorable refinancing terms. OSFI mandates that FRFIs maintain dynamic LTV ratio frameworks. The LTV is recalculated whenever you refinance and at any other time it's deemed prudent, considering shifts in a borrower's risk profile or delinquency status, using a suitable valuation or appraisal method.

## Institutional highlights
- Your loan-to-value (LTV) shows how much of your home's value you're borrowing, and it affects your interest rate.
- Lenders set limits on how high your LTV can be for different mortgages, and they keep a close eye on these limits.
- Lenders will look at things that might affect your home's value when figuring out your LTV for a refinance.
- If you have a Home Equity Line of Credit (HELOC), the maximum combined LTV (including mortgage and HELOC) is typically up to 80% of your home's value.
- Your LTV is recalculated whenever you refinance your mortgage.

## Related guide
- https://ratellow.com/guides/refinance-break-even

## Sources
- Debt service coverage — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017#2.3.3
- LTV Ratio Frameworks — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017#2.4.3
- OSFI exempts uninsured mortgage straight switches from the prescribed MQR and implements portfolio LTI limits — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/osfi-exempts-uninsured-mortgage-straight-switches-prescribed-mqr-implements-portfolio-lti-limits