What are the risks of a high Loan-to-Value Ratio (LTV)?
The risks of a high Loan-to-Value Ratio (LTV) are that lenders consider it to be a riskier loan, and therefore often have higher interest rates. Lenders believe that borrowers who have loans with higher LTVs have a greater likelihood of defaulting on their mortgages due to of the lack of equity in the property. This lack of equity can make it difficult for lenders to recover their losses if the borrower defaults on the loan.
Source:
LTV: Loan-to-Value Ratio in Relation to HUD 221(d)(4) Loans
and
LTV: Loan to Value in Relation to HUD 223f Loans