Real Estate Math

An investor purchases a $500,000 commercial property with a 25% down payment. The lender requires a loan-to-value ratio no greater than 75%. How large is the mortgage?

A$125,000
B$375,000✓ Correct
C$400,000
D$475,000

Explanation

Down payment = $500,000 × 0.25 = $125,000. Mortgage = $500,000 − $125,000 = $375,000, which is 75% of the purchase price.

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