The Loan Mortgage Percentage represents the portion of a property's value that a lender finances through a mortgage. It is calculated by dividing the loan amount by the property's appraised value and is typically expressed as a percentage. This percentage determines the borrower's required down payment, which is the difference between the property's value and the loan amount.

Lenders set Loan Mortgage Percentage requirements to mitigate risk and ensure borrowers have a stake in the property. A higher down payment (lower Loan Mortgage Percentage) reduces the lender's exposure to potential losses if the property value declines or the borrower defaults. For example, conventional loans often require a 20% down payment, resulting in an 80% Loan Mortgage Percentage. Government-backed loans, such as FHA mortgages, may allow a 3.5% down payment (96.5% Loan Mortgage Percentage), while jumbo loans sometimes permit up to 95% financing. Data from the Federal Housing Finance Agency (FHFA) shows that in 2022, the average down payment for all purchase mortgages was 13%, with first-time buyers averaging 7%. However, lenders may charge higher interest rates for loans exceeding 80% LTV due to increased risk. This aligns with the Consumer Financial Protection Bureau's findings that 95% LTV loans accounted for 12% of all mortgages in 2021, compared to 68% for 80% LTV loans. Thus, Loan Mortgage Percentage directly impacts affordability, risk, and loan terms, balancing lender safety with borrower accessibility.