A couple’s home appraises for $92,500. With an 85 % loan-to-value ratio, the minimum down payment is

Rationale

The minimum down payment is $13,875.

To determine the minimum down payment based on an 85% loan-to-value ratio, we first calculate the loan amount and then subtract it from the appraised value of the home. The down payment represents the remaining 15% of the appraised home value.

A (6166) YOUR ANSWER

This amount represents 6.67% of the appraised value, which is significantly lower than the required 15% down payment for an 85% loan-to-value ratio. Thus, it does not meet the criteria for the minimum down payment.

B (7862) YOUR ANSWER

This figure corresponds to approximately 8.5% of the home's appraised value. Since the minimum down payment must be 15% to align with the 85% loan-to-value ratio, this choice is also insufficient.

C (10882) YOUR ANSWER

This amount is about 11.75% of the appraised value, still falling short of the necessary 15%. Like the previous options, it does not fulfill the down payment requirement for an 85% loan-to-value ratio.

D (13875) CORRECT

This is the correct calculation for the minimum down payment. To find this amount, we first calculate 15% of the appraised value: $92,500 x 0.15 = $13,875. This amount ensures compliance with the 85% loan-to-value ratio.

Conclusion

The minimum down payment requirement is essential in financing a home, particularly when dealing with a loan-to-value ratio. In this case, the correct down payment of $13,875 reflects the necessary 15% contribution from the couple, ensuring they meet the criteria for the 85% loan-to-value situation. All other options presented fall short of this requirement, highlighting the importance of accurate calculations in real estate transactions.

A couple’s home appraises for $92,500. With an 85 % loan-to-value ratio, the minimum down payment is

The minimum down payment is $13,875.

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