What is a down payment? Loan-to-value (LTV) ratio?

A down payment is the out-of-pocket payment from the borrower for the purchase of the house. It is the contribution from the borrower. 


LTV ratio is the percentage of loan extended by the bank relative to the purchase price of the property.  The term “LTV ratio” is used interchangeably with “Margin of Advance” (MOA).


LTV ratio + down-payment ratio = 100% property price. For example, a house’s price is $200,000. The borrower pays $60,000 out of pocket; the bank lends $140,000. LTV ratio = $140,000 / $200,000 = 70%. The down payment is 30%.


Typically, the minimum down payment is 30%. The bank makes exception for some residential houses in Phnom Penh that are located in well-known residential areas or well-known Borei. In such case, the minimum down payment is reduced to 20%. Or stated differently, the maximum LTV ratio is increased to 80%.

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