Finance
The loan-to-value ratio (LTV) is calculated as:
APurchase price divided by down payment
BLoan amount divided by appraised value✓ Correct
CMonthly payment divided by income
DDown payment divided by purchase price
Explanation
LTV = Loan Amount / Appraised Value (or purchase price, whichever is lower). A lower LTV indicates more equity and less risk to the lender. Most conventional loans require an LTV of 80% or less to avoid PMI.
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