ITV vs. LTV: the two ratios note buyers confuse

Two ratios show up in every note listing, and they get conflated constantly. Both divide by the property's value — which is why an unverified value quietly corrupts both — but the numerators are different money.

The definitions

Because notes trade at a discount, ITV is usually lower than LTV — and that spread is your margin of safety. Pay $60,000 for a note against a $100,000 property and your ITV is 60%: forty thousand dollars of value stands between you and a loss if the loan defaults and the property must be sold.

Why ITV is the protective ratio

• A borrower can be deeply underwater (high LTV) while your position is still protected (low ITV) — that's the discount doing its work.
• Foreclosure costs, holding time, and resale friction come out of the cushion above your investment — not above the borrower's balance.
• On junior liens the cushion must clear the senior balance first; measuring against full value overstates protection.

Both ratios inherit the value's honesty

Neither ratio is better than the value under it. A stated value 20% above the record makes both ratios read 20% safer than they are — which is why the value should be corroborated across independent sources (county assessor, an independent AVM, the recorded sale) before either ratio is trusted, and flagged as unconfirmed when the sources disagree.