A borrower qualifies for max 80% LTV. Property worth $400,000. Maximum loan amount?

Correct answer: $320,000

Maximum loan amount = Property Value × Maximum LTV = $400,000 × 80% = $320,000. The borrower would need a minimum down payment of $80,000 ($400,000 − $320,000). At exactly 80% LTV, PMI would not be required on a conventional loan. If the borrower put down even $1 less, PMI would be triggered because LTV would exceed 80%.