What is Loan-to-Value (LTV) in Dubai & How to Calculate It

What Is Loan-to-Value (LTV)?

Loan-to-value, often abbreviated as LTV, refers to the percentage of a property’s value that is financed by a bank through a mortgage. The LTV full form is loan-to-value, and it is one of the key measures banks use to assess lending risk and determine minimum deposit requirements.

For example, an 80 percent LTV means the bank finances 80 percent of the purchase price, while the buyer contributes the remaining 20 percent upfront as a downpayment. In Dubai, loan-to-value ratios are governed by regulation, meaning minimum deposit requirements are clearly defined and cannot be reduced below set thresholds.

Why Loan-to-Value Is Important for Property Buyers

Loan-to-value determines how much cash a buyer must commit at the time of purchase. It also influences mortgage eligibility, approval speed, and how much buyers can realistically afford.

In Dubai, LTV is particularly important because:

• Minimum deposit levels are mandatory and non-negotiable

• LTV limits differ for first properties and additional purchases

• Banks assess affordability using LTV alongside income, liabilities, and credit history

Understanding these limits early helps buyers plan budgets accurately and avoid delays once a property has been selected.

Loan-to-Value Formula and How It Is Calculated

Loan-to-value is calculated using a straightforward formula:

Loan amount ÷ Property value × 100

If a buyer purchases a property for AED 2,000,000 and the bank approves a mortgage of AED 1,500,000, the LTV is 75 percent. The remaining 25 percent must be paid as a deposit, excluding transaction costs such as registration fees, valuation fees, and agent commissions.

It is important to note that banks calculate LTV based on the lower of the purchase price or the bank valuation, not necessarily the agreed sale price. If a valuation comes in below the purchase price, the buyer must cover the difference in cash, which can increase the effective upfront requirement.

Difference Between LTV and Down Payment

Loan-to-value and down payment describe the same transaction from different perspectives.

LTV represents the portion financed by the bank. The down payment represents the buyer’s cash contribution. A higher LTV means a lower deposit, while a lower LTV requires more upfront capital.

For example:

• 75 percent LTV equals a 25 percent down payment

• 60 percent LTV equals a 40 percent down payment

In Dubai, down payment requirements are directly linked to regulated LTV caps rather than individual lender discretion.

Current Loan-to-Value Ratios in Dubai

Dubai’s mortgage framework sets clear loan-to-value limits based on buyer profile, residency status, property value, and whether the purchase is a first or subsequent property. These limits are applied consistently across banks.

For First-Time Buyers (UAE Nationals)

UAE nationals benefit from the highest permitted loan-to-value levels:

• For properties valued up to AED 5 million, banks may offer financing of up to 85 percent

• For homes over AED 5 million, the LTV limit is reduced to 75 percent, meaning a 25 percent deposit is required

For First-Time Buyers (Expats)

Expat mortgage buyers face slightly lower loan-to-value limits:

• For properties valued below AED 5 million, the maximum LTV is typically 80 percent

• Properties above AED 5 million allow for up to 70 percent LTV, meaning a 30 percent down payment is required

For Non-Residents

For overseas buyers considering a non-resident mortgage in Dubai, the maximum LTV is often between 60 and 65 percent, depending on the lender and buyer profile.

For Second and Additional Properties

Loan-to-value limits are lower for additional property purchases.

Both nationals and expats generally face a maximum LTV of 60 percent when buying a second or additional property. This effectively means a minimum deposit of 40 percent, reflecting the higher risk associated with multiple property ownership.

For Off-Plan Properties

Loan-to-value does not apply to most off-plan purchases because these transactions are typically financed using a developer payment plan rather than a traditional mortgage.

Where off-plan mortgages are available, the maximum LTV is capped at 50 percent. This means the buyer must have already paid 50 percent of the purchase price to the developer before becoming eligible for mortgage financing.

Loan-to-Value Limits for First-Time Buyers vs Investors

Dubai’s LTV framework clearly distinguishes between owner-occupiers and investors. First-time buyers benefit from higher leverage, while investors are required to commit more equity.

This structure helps manage risk across the market and ensures buyers retain a sufficient financial buffer. Investors should factor higher deposit requirements into return calculations, particularly when comparing ready and off-plan property options.

How to Improve Your Loan-to-Value Outcome

While loan-to-value limits themselves are fixed by regulation, buyers can still improve borrowing outcomes by strengthening their financial profile.

Banks may approve higher loan amounts within the permitted LTV range when buyers:

• Reduce outstanding personal loans or credit card balances

• Maintain a strong credit score and repayment history

• Demonstrate stable income and employment continuity

Meeting the minimum salary requirements for a home loan in the UAE is also essential, as affordability checks run alongside LTV assessments.

Tips for Buyers Applying for a Mortgage

Good preparation significantly improves mortgage approval timelines and certainty. Buyers should:

• Confirm deposit availability before selecting a property

• Budget separately for registration, valuation, and transaction costs

• Secure mortgage pre-approval before signing sale agreements

Speaking with a mortgage advisor can help align property choice with realistic loan-to-value expectations and lender requirements.

Conclusion: Understanding LTV Before You Buy

Loan-to-value is one of the most important concepts for property buyers in Dubai. Understanding what LTV is, the LTV meaning, and the LTV full form (loan-to-value) helps buyers clearly see how much a bank will finance, how much cash is required upfront, and whether a purchase is realistically achievable within current regulations.

Rather than focusing solely on maximising LTV, buyers should use the loan-to-value ratio as a planning tool, alongside an LTV calculator, to choose a property and financing structure that supports long-term affordability and financial comfort. Understanding loan-to-value in Dubai early in the process helps avoid surprises and delays later in the transaction.