> For the complete documentation index, see [llms.txt](https://hypotheca.gitbook.io/hypotheca-docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://hypotheca.gitbook.io/hypotheca-docs/hypotheca/economics/ltv-and-interest-rates.md).

# LTV & Interest Rates

How Hypotheca determines borrowing limits and interest-rate treatment through collateralization and credit tiers.

Borrowing conditions combine collateral protection with measured credit quality.

Collateralization determines the backing required for a position. LTV measures borrowing relative to that backing. The internal credit score assigns a tier, while the tier adjusts effective LTV and the base-rate treatment.

### Core boundaries

* Minimum collateralization: **125%**
* Liquidation threshold: **110%**
* Effective LTV: never above **90%**
* Maximum borrow per agent: **5% of the pool**

These boundaries apply alongside tiered access. Credit quality can improve terms, but it does not remove the over-collateralized structure.

### From score to borrowing terms

```
Higher Credit Quality
        →
Higher Effective LTV
        →
Better Borrowing Terms

Lower Credit Quality
        →
Lower Effective LTV
        →
More Restrictive Borrowing Terms
```

| Tier     | Credit score | LTV multiplier | Maximum effective LTV | Base-rate adjustment  |
| -------- | ------------ | -------------- | --------------------- | --------------------- |
| Platinum | 800-1000     | 1.10x          | 82.5%                 | -20%                  |
| Gold     | 600-799      | 1.00x          | 75%                   | -10%                  |
| Silver   | 400-599      | 0.85x          | 63.75%                | Base                  |
| Bronze   | 200-399      | 0.60x          | 45%                   | +15%                  |
| Rejected | 0-199        | 0x             | 0%                    | Borrowing unavailable |

The tier multiplier determines the effective LTV within the defined limits. A Platinum tier, for example, has a 1.10x multiplier and an 82.5% maximum effective LTV.

The whitepaper defines adjustments to a base interest rate. It does not specify one universal fixed base rate.

{% hint style="info" %}
Effective LTV never exceeds 90%, regardless of credit-tier adjustments.
{% endhint %}


---

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