A buyer makes an offer for $235,000 on a home valued at $230,000 with a 90% LTV loan. What will be the required down payment?

To determine the required down payment on a home purchase with a loan-to-value (LTV) ratio of 90%, we first need to calculate the loan amount based on the home’s appraised value. The loan amount can be found by multiplying the appraised value by the LTV ratio.

Here, the home is valued at $230,000. A 90% LTV means the lender will finance 90% of the appraised value. Therefore, the loan amount would be:

[

Loan Amount = Appraised Value \times LTV

= 230,000 \times 0.90 = 207,000

]

To find the down payment, we subtract this loan amount from the total offer amount of $235,000. The down payment is calculated as follows:

[

Total Offer = $235,000

]

[

Down Payment = Total Offer - Loan Amount

= 235,000 - 207,000 = 28,000

]

This calculation shows that the required down payment would be $28,000. Thus, the selection of $28,000 is correct, as it accurately reflects the difference needed after accounting for the 90% financing based on the home's appraised