Real Estate Math
A home in Illinois is listed for $320,000. After negotiation, the buyer's offer of $305,000 is accepted. If the buyer obtains an 80% LTV mortgage, how much is the down payment?
A$244,000✓ Correct
B$64,000
C$56,000
D$70,000
Explanation
Down payment = Purchase Price × (1 - LTV) = $305,000 × 0.20 = $61,000. The loan amount would be $305,000 × 0.80 = $244,000. Note that the LTV is calculated on the actual purchase price (or appraised value, whichever is lower), not the listing price.
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