Finance
The loan-to-value ratio (LTV) is calculated as:
APurchase price divided by loan amount
BLoan amount divided by appraised value or purchase price (whichever is lower)✓ Correct
CMonthly income divided by monthly debt payments
DAppraised value divided by purchase price
Explanation
LTV = Loan amount ÷ Appraised value (or purchase price, whichever is lower). A higher LTV indicates greater lender risk. Lenders use LTV to determine whether PMI or other requirements apply.
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