The loan-to-value (LTV) ratio compares the amount of your mortgage with the appraised value of the property. Lenders use this to determine how much risk they are taking on with a secured loan and describe the ratio of the property's value to the outstanding mortgage balance. You generally want a loan-to-value (LTV) ratio of 80% or lower for the most favorable mortgage terms. Most borrowers put a 20% down payment on a property. If you have less than 20% equity in the home, lenders will require you to purchase private mortgage insurance, which will cost you .58% to 1.86% of the original loan amount per year. But the benefit is that it could put you in a house sooner and out of the rental abyss and on the road to gaining tens of thousands in building equity wealth. PMI cancellation should happen automatically when your loan-to-value ratio (LTV) falls to 78% of your original balance. You also can cancel PMI once your LTV ratio drops to 80%.