Real Estate Math

A buyer puts 5% down on a $215,000 home purchase. What is the loan amount, and approximately what LTV would require PMI?

A$204,250 loan; LTV of 95% requires PMI (exceeds 80%)✓ Correct
B$204,250 loan; PMI not required
C$193,500 loan; LTV of 90% requires PMI
D$204,250 loan; LTV of 75% requires PMI

Explanation

Down payment = $215,000 x 5% = $10,750. Loan = $215,000 - $10,750 = $204,250. LTV = $204,250 / $215,000 = 95%. Since LTV exceeds 80%, PMI is required.

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