FinancingQuestion 84 of 120
A buyer makes a $90,000 down payment on a $450,000 home and finances the rest. The loan-to-value ratio is:
a.20%
b.70%
c.75%
d.80%
Explanation
The loan amount is $450,000 minus $90,000, which equals $360,000, and $360,000 / $450,000 equals 0.80, or 80 percent LTV. The down payment represents 20 percent equity. A 20 percent down payment often avoids private mortgage insurance on conventional loans.
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