With a cash down payment of $32,300 and a sales price of $161,500, if the property appraisal is $159,500, what is the loan-to-value ratio?

To calculate the loan-to-value (LTV) ratio, you start with the formula:

LTV = (Loan Amount / Appraised Value) x 100.

In this case, you need to determine the loan amount first. The loan amount is the sales price minus the cash down payment.

Sales price: $161,500
Cash down payment: $32,300

Loan Amount = Sales Price - Cash Down Payment
Loan Amount = $161,500 - $32,300 = $129,200.

Next, since the appraisal value is given as $159,500, you use this value to calculate the LTV:

LTV = ($129,200 / $159,500) x 100.

When you perform this calculation:

LTV = 0.8087 x 100 ≈ 80.87%.

This rounds to approximately 81%. Therefore, the loan-to-value ratio is correctly represented by the answer choice of 81%.

It’s important to understand that the LTV ratio is a critical figure in real estate, as it assesses the amount of the loan relative to the value of the property. Lenders often use this metric to evaluate risk when underwriting loan applications. A lower LTV suggests less risk