If a lender agrees to make a loan based on an 80 percent LTV, what is the amount of the loan if the property appraises for 114,500 and the sales price is 116,900?

If a lender agrees to make a loan based on an 80 percent LTV, what is the amount of the loan if the property appraises for 114,500 and the sales price is 116,900?

• A. 91,000
• B. 91,600
• C. 93,000
• D. 92,000

Answer: (B)

Lenders determine the loan amount using 80% of the lower of the property’s appraised value or the purchase price. Here, the appraised value is 114,500 and the sales price is 116,900, so the lower figure is 114,500. Calculating 80% of that value gives 0.8 × 114,500 = 91,600. Therefore, the maximum loan amount would be 91,600.

Lenders determine the loan amount using 80% of the lower of the property’s appraised value or the purchase price. Here, the appraised value is 114,500 and the sales price is 116,900, so the lower figure is 114,500. Calculating 80% of that value gives 0.8 × 114,500 = 91,600. Therefore, the maximum loan amount would be 91,600.