Loan-to-Value Ratio (LTV)

Loan-to-value ratio is the loan amount divided by the property's appraised value or purchase price, expressed as a percent. A $375,000 loan on a $500,000 property is 75% LTV. DSCR lenders cap loans by both LTV and DSCR, and the lower of the two limits wins.

Typical DSCR purchase caps are 75 to 80% LTV, with cash-out refinances at 70 to 75%. The LTV cap sets the most a lender will advance regardless of rent. The DSCR minimum sets the most the rent will support regardless of value. A property with strong rent and a weak appraisal is limited by LTV; one with a strong appraisal and thin rent is limited by DSCR.

The two interact through the payment. A lower LTV means a smaller loan, a smaller payment and a higher DSCR, which is why the fastest fix for a ratio below the lender's minimum is more down payment. The calculator reports the LTV implied by the maximum loan at your target ratio.

Further reading: Loan-to-Value Ratio (LTV) on Wikipedia.