The difference between the purchase price of the property and the amount borrowed is the borrower's ________. The LTV is the ratio of the amount of the loan to the market (or appraised) value of the ________. The ________, the greater the protection for the lender if the applicant defaults on the payments and the lender must repossess and sell the property.

Question

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The down payment is the difference between the purchase price and the amount borrowed. The LTV (loan-to-value) ratio is the amount of the loan to the market (or appraised) value of the property. The lower the LTV ratio, the higher the down payment, which provides greater protection for the lender if the borrower defaults on the payments and the property must be repossessed and sold.

The Difference Between the Purchase Price of the Property and the Amount