Finance
What is 'loan-to-value ratio' (LTV)?
AThe ratio of monthly payment to gross income
BThe ratio of the loan amount to the appraised value or purchase price (whichever is lower)✓ Correct
CThe ratio of interest to principal in the monthly payment
DThe ratio of the down payment to the purchase price
Explanation
LTV ratio = Loan Amount / Appraised Value (or purchase price, whichever is lower). A higher LTV means less equity and greater risk for the lender, often triggering PMI requirements for conventional loans above 80% LTV.
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