Finance
The loan-to-value (LTV) ratio is calculated as:
APurchase price divided by loan amount
BLoan amount divided by appraised value✓ Correct
CDown payment divided by purchase price
DMonthly payment divided by gross income
Explanation
LTV ratio = Loan Amount ÷ Appraised Value (or purchase price, whichever is lower). A higher LTV means the borrower has less equity, which typically increases lender risk and may require private mortgage insurance (PMI).
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