Ontario Real Estate Licensing Exam Practice · Question
A buyer is approved for a mortgage at 80% Loan-to-Value (LTV) on a property appraised at $500,000. If the buyer's down payment is $120,000, what is the maximum purchase price they can afford with this LTV and down payment?
If the LTV is 80%, the down payment represents 20% of the purchase price. Therefore, $120,000 / 0.20 = $600,000 is the maximum affordable purchase price.
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Question: A buyer is approved for a mortgage at 80% Loan-to-Value (LTV) on a property appraised at $500,000. If the buyer's down payment is $120,000, what is the maximum purchase price they can afford with this LTV and down payment?
Answer options: ✅ $600,000
- $500,000
- $580,000
- $620,000
Correct answer: $600,000
Explanation: If the LTV is 80%, the down payment represents 20% of the purchase price. Therefore, $120,000 / 0.20 = $600,000 is the maximum affordable purchase price.
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