If the maximum loan-to-value ratio that a lender will accept on a $100,000 loan is 90 percent,then the borrower must make
A) a minimum down payment of $10,000 plus closing costs.
B) a minimum down payment including closing costs of $10,000.
C) closing costs plus points of $10,000.
D) a maximum down payment of $10,000.
E) none of these.

Question

Quizplus · Accepted Answer

The maximum loan-to-value ratio of 90 percent means that the lender is willing to lend up to 90 percent of the value of the property. Therefore, on a $100,000 loan, the lender will lend up to $90,000. To make up the remaining 10 percent or $10,000, the borrower must make a minimum down payment of $10,000 plus the closing costs. Therefore, option A is the correct choice.

If the Maximum Loan-To-Value Ratio That a Lender Will Accept