Given a first loan of $150,000 and a lesser of sale price or appraised value of $450,000, what is the LTV?

Given a first loan of $150,000 and a lesser of sale price or appraised value of $450,000, what is the LTV?

• A. 33.3%
• B. 25%
• C. 40%
• D. 50%

Answer: (A)

LTV is found by comparing the loan amount to the value used for the loan decision, which is the lower of the purchase price or the appraised value. Here that value is 450,000. So you divide 150,000 by 450,000: 150,000 / 450,000 = 0.333..., which is 33.3%. Therefore, the loan-to-value ratio is 33.3%. The other percentages would require a different denominator (larger or smaller than 450,000).

LTV is found by comparing the loan amount to the value used for the loan decision, which is the lower of the purchase price or the appraised value. Here that value is 450,000. So you divide 150,000 by 450,000: 150,000 / 450,000 = 0.333..., which is 33.3%. Therefore, the loan-to-value ratio is 33.3%. The other percentages would require a different denominator (larger or smaller than 450,000).