An investor criterion for a home mortgage specifies a loan-to-value ratio of 90% of an appraisal valued at $180,000. If a buyer qualifies for a loan of $145,000, how much of the purchase will be financed by the investor?

An investor criterion for a home mortgage specifies a loan-to-value ratio of 90% of an appraisal valued at $180,000. If a buyer qualifies for a loan of $145,000, how much of the purchase will be financed by the investor?

• A. $180,000
• B. $162,000
• C. $145,000
• D. $135,000

Answer: (C)

To determine how much of the purchase will be financed by the investor using the provided loan-to-value (LTV) ratio, we start by calculating the maximum amount the investor would finance based on the appraised value of the property. The appraised value is stated to be $180,000, and the LTV ratio specified by the investor is 90%. To find the maximum loan amount, we calculate 90% of the appraised value: \[ 90\% \text{ of } 180,000 = 0.90 \times 180,000 = 162,000. \] This means that, based on the appraisal, the investor can finance up to $162,000. However, the amount for which the buyer qualifies is $145,000, which is below the maximum amount. In this scenario, the investor will finance the lesser of the two amounts (the maximum allowable based on the LTV and the amount the buyer qualifies for). Since the buyer qualifies for a loan of $145,000, this is the amount that will be financed by the investor. Thus, the amount financed aligns directly with the buyer's qualification rather than the maximum LTV allowance, confirming that the correct answer is that the

To determine how much of the purchase will be financed by the investor using the provided loan-to-value (LTV) ratio, we start by calculating the maximum amount the investor would finance based on the appraised value of the property.

The appraised value is stated to be $180,000, and the LTV ratio specified by the investor is 90%. To find the maximum loan amount, we calculate 90% of the appraised value:

[

90% \text{ of } 180,000 = 0.90 \times 180,000 = 162,000.

]

This means that, based on the appraisal, the investor can finance up to $162,000. However, the amount for which the buyer qualifies is $145,000, which is below the maximum amount. In this scenario, the investor will finance the lesser of the two amounts (the maximum allowable based on the LTV and the amount the buyer qualifies for).

Since the buyer qualifies for a loan of $145,000, this is the amount that will be financed by the investor. Thus, the amount financed aligns directly with the buyer's qualification rather than the maximum LTV allowance, confirming that the correct answer is that the