Finance
The 'loan-to-value' (LTV) ratio is calculated as:
AThe loan amount divided by the purchase price
BThe loan amount divided by the appraised value (or purchase price, whichever is lower)✓ Correct
CThe down payment divided by the loan amount
DThe interest rate divided by the loan amount
Explanation
LTV = Loan Amount ÷ Lower of Appraised Value or Purchase Price × 100%. Lenders use the lower of the two values to protect against overpaying relative to market value.
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