A borrower purchases a home for $250,000 with a loan amount of $200,000. What is the LTV ratio?
Correct Answer
B) 80%
LTV (Loan-to-Value) is calculated by dividing the loan amount by the property value or sales price, whichever is lower. $200,000 ÷ $250,000 = 0.80 or 80%. LTV is a key risk factor used in mortgage underwriting and pricing.
Why This Is the Correct Answer
LTV (Loan-to-Value) is calculated by dividing the loan amount by the property value or sales price, whichever is lower. $200,000 ÷ $250,000 = 0.80 or 80%. LTV is a key risk factor used in mortgage underwriting and pricing.
More Mortgage Knowledge Questions
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A borrower asks about the difference between discount points and origination fees. What is the most accurate explanation?
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