FinancingQuestion 82 of 120
A lender will make a loan at a maximum 75% LTV on a property appraised at $500,000. The largest loan available is:
a.$300,000
b.$375,000
c.$400,000
d.$425,000
Explanation
The maximum loan equals the LTV ratio times the appraised value, so 0.75 times $500,000 equals $375,000. The borrower must supply the remaining $125,000 as a down payment. Lenders cap LTV to limit their risk exposure.
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