Appraisal is $200,000, purchase price $195,000. Lender uses lower value. Down payment $30,000. LTV?

Correct answer: 84.6%

For LTV calculations, lenders use the LESSER of the appraised value or the purchase price. Here, the purchase price ($195,000) is lower than the appraisal ($200,000), so the lender uses $195,000 as the property value for LTV. This "lesser of" rule protects the lender — if the purchase price is below the appraised value, the borrower is getting a good deal, and LTV should reflect what was actually paid. If the appraisal came in below the purchase price, that lower appraisal figure would be used instead, which would increase LTV and could affect loan approval.