Question

A lender determines that a homebuyer can afford to borrow $220,000 on a mortgage loan. The lender requires an 85% loan-to-value ratio. How much can the borrower pay for a property and still qualify for this loan amount (to the nearest $1,000)?

A: $187,000
B: $243,000
C: $254,000
D: $259,000

Answer 1

D: $259,000

Step-by-step explanation:

The computation of the paying amount which borrower can pay for a property is shown below:

= Mortgage loan amount for borrow ÷ loan-to-value ratio

= $220,000 ÷ 85%

= $258,823.53

= $259,000 round off

We simply divide the mortgage loan by the loan to value ratio so that paying amount could arrive which borrower can pay for a property.