For a loan-to-value ratio, if the property value is $100,000 and the loan is $20,000, what is the Loan-to-Value ratio?

To determine the Loan-to-Value (LTV) ratio, you calculate it using the formula:

LTV = (Loan Amount / Property Value) x 100%

In this scenario, the property value is $100,000 and the loan amount is $20,000. Plugging these values into the formula gives:

LTV = ($20,000 / $100,000) x 100% = 0.2 x 100% = 20%

This indicates that the Loan-to-Value ratio is 20%.

In the context of the choices provided, the selected answer should reflect this calculation accurately. The correct LTV ratio indicates the proportion of the loan amount in relation to the property's value, which is 20%. Thus, the misunderstanding may lie in miscalculating the ratio or misinterpreting the choices. The LTV ratio helps lenders assess the risk associated with a loan; a lower percentage often indicates a lower risk.