In the purchase scenario, what down payment percentage is required?

In the purchase scenario, what down payment percentage is required?

• A. 5%
• B. 10%
• C. 15%
• D. 20%

Answer: (B)

The key idea is that the down payment is set by the loan program’s minimum guidelines and determines the loan-to-value (LTV). A ten percent down payment means the borrower is financing ninety percent of the purchase price with the loan. This is the minimum required in the scenario, so anything less would push the LTV beyond what the program allows and would not qualify under these terms. Paying more than ten percent is allowed, but not required to meet the program’s qualification. For context, a five percent down would create a ninety-five percent LTV and exceed the minimum for this scenario, while fifteen or twenty percent would still be acceptable but are simply not the required minimum.

The key idea is that the down payment is set by the loan program’s minimum guidelines and determines the loan-to-value (LTV). A ten percent down payment means the borrower is financing ninety percent of the purchase price with the loan. This is the minimum required in the scenario, so anything less would push the LTV beyond what the program allows and would not qualify under these terms. Paying more than ten percent is allowed, but not required to meet the program’s qualification. For context, a five percent down would create a ninety-five percent LTV and exceed the minimum for this scenario, while fifteen or twenty percent would still be acceptable but are simply not the required minimum.