Real Estate Math
A Pennsylvania residential property has an appraised value of $310,000. The buyer makes a 20% down payment. What is the LTV ratio and the mortgage amount?
ALTV 80%, loan $248,000✓ Correct
BLTV 20%, loan $310,000
CLTV 80%, loan $310,000
DLTV 20%, loan $62,000
Explanation
Down payment = $310,000 × 20% = $62,000. Loan amount = $310,000 − $62,000 = $248,000. LTV = $248,000 / $310,000 = 80%. With exactly 20% down, the LTV is 80%, which is the threshold below which PMI is not required on conventional loans. Pennsylvania buyers who can achieve an 80% LTV avoid PMI and typically receive better interest rates.
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