A question from the app bank
Try the explanation before you install.
National portion · Real Estate Calculations
A buyer obtains an 80% loan-to-value mortgage on a $425,000 purchase. What is the loan amount?
For this example, use $425,000 as the property value for LTV.
- A.$85,000
- B.$340,000
- C.$382,500
- D.$425,000
Check the answer and all four choices
B. $340,000
Loan amount = property value × LTV.
$425,000 × 0.80 = $340,000.
- A. $85,000: the 20% down payment, not the loan.
- B. $340,000: 80% of the value, which is the amount borrowed.
- C. $382,500: 90% of the value. That uses the wrong percentage.
- D. $425,000: the full price. This loan covers only 80%.
Use it on the next question: first check whether you are being asked for the loan or the down payment. Here, those are 80% and 20% of the same value.
Check the CFPB definition of LTVAn app practice question, with the property-value assumption clarified.
Try more free questions