LTV and the down payment: how much house your money buys
Loan-to-value (LTV) is the ratio between your mortgage and the value of the property securing it. In Estonia, Eesti Pank caps standard housing loans at 85% LTV — meaning at least a 15% down payment (omafinantseering). The property’s appraised value, not the purchase price, anchors the calculation.
How LTV is calculated
LTV = loan amount ÷ property value. If a bank lends €170,000 against a property valued at €200,000, the LTV is 85%. Banks base the value on an appraisal — if the appraisal comes in below your purchase price, the loan is sized off the lower figure and your required cash grows.
A lower LTV means less risk for the bank and often a better margin for you: borrowers bringing more equity routinely negotiate better terms. The margin over Euribor is where that advantage shows up.
The Estonian macroprudential limits
Eesti Pank, Estonia’s central bank, sets binding requirements for housing loans: a standard LTV cap of 85%, a maturity cap of 30 years, and a limit on monthly debt payments relative to income (see DSTI). Banks may exceed the LTV cap only within a small regulated share of new loans.
With a state-backed guarantee (widely known as the KredEx guarantee), eligible buyers — typically first-home buyers and young families — can borrow at a higher effective LTV, reducing the cash needed upfront. Similar caps exist across the region: Finland applies its own statutory loan cap (lainakatto) with a gentler limit for first-home buyers.
What counts toward the down payment
The down payment is normally your own money: savings, proceeds from selling property, or documented gifts. Banks generally do not accept another consumer loan as omafinantseering — taking a personal loan for the deposit worsens your debt-service ratio and can sink the application.
Additional collateral (for example a second property, or in some schemes a co-borrower’s asset) can substitute for part of the cash deposit at some banks. Terms differ enough between banks that this alone justifies comparing mortgage offers.
Frequently asked questions
Is the 15% down payment an absolute rule in Estonia?+
The 85% LTV cap is the standard Eesti Pank requirement, but a state guarantee (KredEx) allows eligible borrowers to put down less, and banks have a small regulated allowance for exceptions. Verify the current rules — they are reviewed periodically.
Does the down payment have to be cash?+
Mostly yes — own savings or documented funds. Some banks accept additional collateral in place of part of the cash. A consumer loan taken to fund the deposit is generally not accepted and hurts your affordability assessment.
Purchase price or appraised value — which counts?+
Banks lend against the appraised value. If the appraisal is lower than the agreed price, the difference comes out of your pocket on top of the normal down payment.
Does a bigger down payment get me a better rate?+
Often, yes. A lower LTV reduces the bank’s risk, and banks price that into the margin. It is one of the few pricing levers fully in the borrower’s control.
The Nordic Rate Digest
Once a month: EURIBOR direction, the best loan & deposit rates across 8 countries, and what changed. No spam, ever.