A borrower purchases a home for $250,000 with a 10% down payment. What is the LTV ratio?

Correct answer: 90%

Down payment = $250,000 × 10% = $25,000. Loan amount = $250,000 − $25,000 = $225,000. LTV = $225,000 ÷ $250,000 = 90%. At 90% LTV, the borrower will need PMI on a conventional loan since LTV exceeds 80%. For an FHA loan, the borrower would pay both upfront MIP (1.75% of loan amount) and annual MIP. The 10% down payment is the minimum required for FHA borrowers with credit scores between 500-579.