Under the three main government-backed mortgage programs, loan-to-value limits top out at 96.5% for FHA purchase loans, 100% for VA purchase loans, and 100% for USDA purchase loans in eligible rural areas. Those are the base ratios written into each program. Your real LTV almost always ends up higher, because each program charges an upfront fee that most borrowers finance into the loan balance rather than paying at closing. Credit score, refinance type, and entitlement status can also move the ceiling down. The sections below walk through where each limit lands and what pushes it.
FHA Loan-to-Value Limits
The standard FHA purchase loan allows a maximum LTV of 96.5%, based on the lesser of the sale price or appraised value.1Office of the Law Revision Counsel. 12 USC 1709 – Insurance of Mortgages That means a 3.5% down payment. The ceiling covers one- through four-unit properties, provided you occupy one of the units as your primary residence.
Credit score decides which tier you fall into. A score of 580 or higher qualifies for the full 96.5%. A score between 500 and 579 drops the maximum to 90%, requiring 10% down.2U.S. Department of Housing and Urban Development. Mortgagee Letter 10-29 – Minimum Credit Scores and Loan-to-Value Ratios Below 500, FHA won’t insure the loan. Most lenders set their own floors well above the program minimum, so a 500-score approval is technically possible and practically uncommon.
Three- and four-unit properties face an added constraint: the self-sufficiency test. If the monthly payment (including taxes, insurance, and mortgage insurance) exceeds the net rental income from all units, the loan amount has to be reduced until the math works, which effectively lowers your LTV. When a non-occupying co-borrower is on a three- or four-unit FHA loan, the LTV is capped at 75%.
Refinances follow their own ceilings. A standard rate-and-term refinance maxes out at 97.75% of the current appraised value.3U.S. Department of Housing and Urban Development. HUD 4155.1 Chapter 3, Section B – Maximum Mortgage Amounts on No Cash Out/Cash Out Refinance Transactions A cash-out refinance is capped much tighter at 80% of appraised value, so you need at least 20% equity to pull cash out through FHA.4U.S. Department of Housing and Urban Development. FHA Single Family Housing Policy Handbook 4000.1 The FHA Streamline Refinance has no LTV limit at all, because HUD waives the appraisal and bases the new loan on your existing balance rather than current value.5Federal Deposit Insurance Corporation. Streamline Refinance If your home has lost value since purchase, a Streamline can still go through.
VA Loan-to-Value Limits
VA-backed purchase loans allow 100% LTV, meaning no down payment is required if the sale price does not exceed the appraised value.6Office of the Law Revision Counsel. 38 USC 3703 – Basic Provisions Relating to Loan Guaranty and Insurance The VA does not lend money directly. It guarantees a portion of the loan, and that guarantee lets the lender extend full financing.
How far that 100% ratio reaches depends on your entitlement. With full entitlement, there is no loan limit; the price the appraisal supports is the price you can borrow.7Department of Veterans Affairs. VA Home Loan Entitlement and Limits Loan limits reappear only when your entitlement is reduced, typically because you already have an active VA loan or previously used your benefit without restoring it. In that case, the lender calculates the remaining guarantee and may require a down payment on the amount exceeding what the VA still covers. Every VA loan requires a Certificate of Eligibility, which lenders can usually pull electronically.8U.S. Department of Veterans Affairs. Eligibility for VA Home Loan Programs
On the refinance side, the VA cash-out refinance allows up to 100% of the home’s reasonable value, which is far more generous than FHA’s 80% cap.9eCFR. 38 CFR 36.4306 – Refinancing of Mortgage or Other Lien The funding fee can be added on top, but any portion of the fee that would push the loan above 100% of appraised value must be paid in cash at closing. The Interest Rate Reduction Refinance Loan (IRRRL) works like FHA’s Streamline: no appraisal in most cases, no standard LTV cap, and the total loan (including closing costs and funding fee) generally cannot exceed 100% of reasonable value. Certain energy-efficient improvements may push it slightly higher.
USDA Loan-to-Value Limits
The USDA Guaranteed Loan Program offers 100% financing based on the appraised value, with no down payment.10eCFR. 7 CFR 3555.101 – Loan Purposes Reaching that 100% depends on two eligibility filters that are stricter than anything FHA or VA imposes.
The property has to sit in a USDA-designated rural area. Those designations cover more territory than most people expect, including small towns and the suburban edges of some metro areas; USDA maintains an online map for address-level checks. Household income cannot exceed 115% of the area median income, and the calculation counts every adult household member, not just the borrowers on the loan.11USDA Rural Development. Guaranteed Rural Housing Program Income Limits That trips up applicants who qualify individually but have a working adult child or parent living with them.
USDA sets no minimum credit score at the federal level, though most lenders apply their own floor around 620 to 640.12USDA Rural Development. Single Family Housing Guaranteed Loan Program Overview – 101 Unlike FHA, the program itself doesn’t step your LTV down for a lower score. The USDA Streamlined-Assist Refinance for existing borrowers has no LTV requirement and no appraisal mandate, though income eligibility and a clean 12-month payment history still apply.10eCFR. 7 CFR 3555.101 – Loan Purposes
How Financed Upfront Fees Raise Your Real LTV
Each program charges an upfront fee that most borrowers roll into the loan. Once financed, the amount you actually owe exceeds the base LTV.
FHA charges an Upfront Mortgage Insurance Premium of 1.75% of the base loan amount.13U.S. Department of Housing and Urban Development. Mortgagee Letter 2015-01 – Appendix 1.0 Mortgage Insurance Premiums Financing it on a 96.5% LTV purchase pushes total LTV to roughly 98.2%.
VA funding fees run from 1.25% to 3.3%, depending on down payment size and whether you have used the benefit before. A first-time user putting nothing down pays 2.15%; a subsequent user with less than 5% down pays 3.3%. On a zero-down purchase with the fee financed, total LTV starts above 102% for a first-time user and above 103% for a subsequent user. Veterans receiving VA disability compensation, eligible surviving spouses, and Purple Heart recipients on active duty are exempt from the funding fee.14U.S. Department of Veterans Affairs. VA Funding Fee and Loan Closing Costs
USDA charges an upfront guarantee fee of 1% of the loan amount.12USDA Rural Development. Single Family Housing Guaranteed Loan Program Overview – 101 Financed on a 100% LTV purchase, total LTV lands at 101%. Your closing documents will show both the base and the total.
Ongoing Insurance Costs Set by Your Original LTV
The upfront fees are one-time. The annual premiums are where your starting LTV keeps costing you, and the three programs handle it very differently.
FHA charges an annual mortgage insurance premium, split into monthly payments. For most 30-year borrowers at the standard 96.5% LTV, the rate is 0.85% of the outstanding balance.13U.S. Department of Housing and Urban Development. Mortgagee Letter 2015-01 – Appendix 1.0 Mortgage Insurance Premiums If your original LTV was above 90%, the premium stays for the life of the loan. If your original LTV was 90% or below (only reached through the 10% down tier), the premium cancels after 11 years. That makes the 580 credit-score line unusually expensive: the borrower at 579 putting 10% down gets a better long-term insurance deal than the borrower at 580 putting 3.5% down.
VA loans carry no monthly mortgage insurance. Once the funding fee is paid or financed, there is no ongoing insurance-like premium.
USDA charges an annual fee of 0.35% of the average scheduled unpaid principal balance for the life of the loan.12USDA Rural Development. Single Family Housing Guaranteed Loan Program Overview – 101 On a $250,000 loan, the gap between FHA’s 0.85% and USDA’s 0.35% works out to roughly $1,250 a year.
Loan Limits and Seller Concessions Are Separate from LTV
Two rules often get confused with LTV limits but operate independently.
FHA imposes dollar loan limits that cap the loan amount regardless of the LTV ratio. For 2026, the floor for single-family homes is $541,287 in lower-cost areas, and the ceiling reaches $1,249,125 in high-cost markets.15U.S. Department of Housing and Urban Development. HUD Federal Housing Administration Announces 2026 Loan Limits If 96.5% of your purchase price exceeds the limit for your county, the loan gets capped at the limit and you cover the difference in cash.
Seller concessions do not change your LTV directly. They reduce what you pay at closing, not the loan amount. Each program still caps them:
- FHA limits seller concessions to 6% of the sale price; anything above that is subtracted from the sale price before the loan is calculated, which lowers your maximum loan.
- VA caps seller concessions at 4% of the home’s reasonable value, counting items like credits toward the funding fee, debt payoffs, and prepaid hazard insurance. Normal closing costs the seller pays, such as title insurance and recording fees, generally do not count against the 4%.14U.S. Department of Veterans Affairs. VA Funding Fee and Loan Closing Costs
- USDA caps seller contributions at 6% of the sale price; anything above is treated as an ineligible loan purpose.12USDA Rural Development. Single Family Housing Guaranteed Loan Program Overview – 101
If a seller inflates the sale price to absorb a large concession, the appraisal is likely to come in lower, which then does affect what you can borrow.