FinancingQuestion 73 of 120
A buyer purchases a home for $400,000 with a $320,000 loan. The loan-to-value (LTV) ratio is:
a.70%
b.75%
c.80%
d.90%
Explanation
The LTV ratio equals the loan amount divided by the value or price, so $320,000 / $400,000 equals 0.80, or 80 percent. Lenders use LTV to gauge risk, with higher ratios generally requiring mortgage insurance. A lower LTV means more borrower equity.
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