Finance
The 'loan-to-value' (LTV) ratio is calculated by dividing:
AThe property's market value by the loan amount
BThe loan amount by the appraised value (or purchase price, whichever is lower)✓ Correct
CThe monthly payment by the loan amount
DThe interest rate by the loan term
Explanation
LTV = Loan Amount ÷ Property Value (lesser of appraised value or purchase price). Lenders use LTV to assess risk—higher LTV means more risk, which may require PMI or result in higher rates.
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