If a loan of $765,000 has a down payment of $85,000, what is the loan-to-value ratio?

If a loan of $765,000 has a down payment of $85,000, what is the loan-to-value ratio?

• A. 90%
• B. 92%
• C. 93%
• D. 95%

Answer: (A)

To determine the loan-to-value (LTV) ratio, you first need to understand its formula, which is calculated as the loan amount divided by the total value of the property being financed. The total value can be derived by adding the loan amount to the down payment. In this scenario, the loan amount is $765,000 and the down payment is $85,000. To find the total value of the property, you would add these two amounts together: Total Property Value = Loan Amount + Down Payment Total Property Value = $765,000 + $85,000 = $850,000 Now, you can calculate the LTV ratio: LTV Ratio = Loan Amount / Total Property Value LTV Ratio = $765,000 / $850,000 By performing the division: LTV Ratio = 0.9 or 90% This indicates that the loan constitutes 90% of the total property value. Therefore, if a loan of $765,000 has a down payment of $85,000, the loan-to-value ratio is indeed 90%.

To determine the loan-to-value (LTV) ratio, you first need to understand its formula, which is calculated as the loan amount divided by the total value of the property being financed. The total value can be derived by adding the loan amount to the down payment.

In this scenario, the loan amount is $765,000 and the down payment is $85,000. To find the total value of the property, you would add these two amounts together:

Total Property Value = Loan Amount + Down Payment

Total Property Value = $765,000 + $85,000 = $850,000

Now, you can calculate the LTV ratio:

LTV Ratio = Loan Amount / Total Property Value

LTV Ratio = $765,000 / $850,000

By performing the division:

LTV Ratio = 0.9 or 90%

This indicates that the loan constitutes 90% of the total property value. Therefore, if a loan of $765,000 has a down payment of $85,000, the loan-to-value ratio is indeed 90%.