Real Estate Math

A Wyoming property appraised at $420,000 is eligible for an 80% LTV loan. The buyer has $30,000 for a down payment. Is the buyer eligible for this loan without PMI?

AYes, because $30,000 covers the 80% LTV requirement
BNo, because the required down payment is $84,000 and $30,000 is insufficient✓ Correct
CYes, because the lender will waive PMI for strong credit scores
DNo, but only because PMI is always required on conventional loans

Explanation

80% LTV loan = $420,000 × 80% = $336,000. Required down payment = $420,000 − $336,000 = $84,000. The buyer only has $30,000, which would give a 92.9% LTV ($390,000 ÷ $420,000). This exceeds 80% LTV, so PMI would be required.

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