What is the exam-ready answer?
| Roadmap post | 235 of 500 |
|---|---|
| Official syllabus topic | XI.B.3 General Concepts: Loan-to-Value ratio |
| Official PSI area | Real Estate Calculations |
| Published weight | 7% of the 100-question national portion |
| Source edition | PSI Georgia Candidate Information Bulletin dated July 1, 2026 |
| Content checked through | August 2, 2026 |
The Rule
PSI publishes a weight for the complete official area, not a guaranteed count for this individual calculation. Follow the stated facts, units, time basis, and rounding instruction.
Formula and variables
| Symbol or term | Meaning |
|---|---|
| Loan | The amount financed, not the purchase price or total lifetime payments |
| Value | The property value or base stated for the calculation |
| LTV | The loan expressed as a percentage of value |
Step-by-step method
- Identify which of loan, value, LTV, and down payment the question asks for.
- Convert the percentage to a decimal before multiplying or dividing.
- Use loan divided by value for LTV, then algebraically rearrange only if the missing term changes.
- Find down payment from purchase price minus loan when the facts support that relationship.
- Check that a larger down payment produces a smaller LTV, not a larger one.
Georgia-specific distinction
Worked examples
Example 1: Find LTV
Scenario. A borrower obtains a $272,000 loan on a property valued at $340,000.
- LTV = loan / value.
- $272,000 / $340,000 = 0.80.
- 0.80 x 100 = 80%.
Answer. The LTV is 80%.
Reasonableness check. The loan is four-fifths of the value, so 80% is reasonable.
Example 2: Find loan and down payment
Scenario. A buyer purchases for $415,000 using a 75% loan based on the stated $415,000 value.
- Loan = $415,000 x 0.75 = $311,250.
- Down payment = $415,000 - $311,250 = $103,750.
Answer. The loan is $311,250 and the down payment is $103,750.
Reasonableness check. A 75% loan leaves 25% for the down payment, and 25% of $415,000 is $103,750.
Common exam traps
- Dividing value by loan and reporting a number above 100%
- Calling the down-payment percentage the LTV percentage
- Applying the LTV to the sale price when the question supplies a different underwriting value
- Using the original loan balance when the question asks for current LTV
Original practice questions with detailed explanations
These original instructional questions map to the July 1, 2026 PSI outline. They are not copied from PSI or any live examination. Write the setup before opening the explanation.
Question 1A $210,000 loan is made on a property valued at $280,000. What is the LTV?
- A. 25%
- B. 75%
- C. 80%
- D. 133.3%
Show answer and explanation →
Answer: B. 75%
$210,000 / $280,000 = 0.75, or 75%.
Question 2A lender allows an 85% LTV on a stated value of $360,000. What is the maximum loan?
- A. $54,000
- B. $306,000
- C. $324,000
- D. $423,529
Show answer and explanation →
Answer: B. $306,000
Loan = value x LTV = $360,000 x 0.85 = $306,000.
Question 3All else equal, what happens to LTV when the buyer makes a larger down payment?
- A. It rises
- B. It falls
- C. It stays fixed
- D. It becomes the DTI
Show answer and explanation →
Answer: B. It falls
A larger down payment reduces the loan relative to value, so the LTV falls.
Mastery tracking
Mark this calculation mastered only when every statement is true.
- I can identify loan as the numerator and value as the denominator.
- I can rearrange the formula to find loan or value.
- I can connect LTV and down-payment percentage without confusing them.
- I follow the stated value base rather than inventing one.
- I can check the result using the inverse relationship between down payment and LTV.
Recommended next lesson
Continue with Debt-to-Income and Buyer-Qualification Ratios. Separate a collateral ratio from a borrower-income ratio.
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