Yes, loan-to-value affects interest rates in several different ways. First, a higher loan-to-value ratio is associated with a higher perceived risk; thus, lenders would likely demand a higher interest rate to compensate for the increased risk. The interest rate offered by a lender is affected by the risk the lender perceives in lending money to a borrower with a high loan-to-value ratio. Credit-to-value ratios that are too high result in higher interest rates due to penalties imposed by government-backed loan programs (like FHA and VA loans).