Finance
The loan-to-value (LTV) ratio is calculated as:
APurchase price divided by loan amount
BLoan amount divided by appraised value, expressed as a percentage✓ Correct
CDown payment divided by purchase price
DMonthly payment divided by gross income
Explanation
LTV = Loan Amount ÷ Appraised Value × 100. A lower LTV means the borrower has more equity, which reduces lender risk. Lenders use LTV to determine loan eligibility and whether PMI is required.
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