If the loan amount is $337,500 and the down payment is $37,500, what is the LTV?

The loan-to-value ratio (LTV) is a financial term that represents the ratio of a loan amount to the appraised value or purchase price of the property. To calculate the LTV, you can use the formula:

LTV = Loan Amount / (Loan Amount + Down Payment)

In this case, the loan amount is $337,500, and the down payment is $37,500. First, calculate the total value of the property by adding the loan amount to the down payment:

Total Property Value = Loan Amount + Down Payment

Total Property Value = $337,500 + $37,500 = $375,000

Next, apply the values to the LTV formula:

LTV = Loan Amount / Total Property Value

LTV = $337,500 / $375,000

When you perform the division, you get:

LTV = 0.9 or 90%

This means that the loan covers 90% of the total value of the property, which indicates a high level of financing relative to the property's value. This high LTV ratio can have implications for both the borrower and lender, as it typically represents a higher risk for the lender. Thus, the correct answer is that the LTV is