Question

How much would you have to put down on a house costing $100,000 if the house had an appraised value of $105,000 and the lender required an 80 percent loan-to-value ratio?

Answer 1

To calculate the down payment required for a house costing $100,000 with an appraised value of $105,000 and a lender requirement of an 80 percent loan-to-value (LTV) ratio, follow these steps:

1. Calculate the loan amount: The loan amount is determined by the LTV ratio, which is the percentage of the appraised value that the lender is willing to finance. In this case, the LTV ratio is 80 percent, so the loan amount will be 80 percent of the appraised value.

Loan amount = LTV ratio * Appraised value Loan amount = 0.8 * $105,000 Loan amount = $84,000

2. Calculate the down payment: The down payment is the difference between the purchase price and the loan amount. In this case, the purchase price is $100,000.

Down payment = Purchase price - Loan amount Down payment = $100,000 - $84,000 Down payment = $16,000

Therefore, you would need to put down $16,000 as a down payment on the house costing $100,000, with an appraised value of $105,000, and with the lender requiring an 80 percent LTV ratio.