Which action would increase the LTV for a given property value?

Which action would increase the LTV for a given property value?

• A. Increase the first loan amount
• B. Increase the appraised value
• C. Increase the sale price
• D. Increase the down payment

Answer: (A)

LTV is the ratio of the loan amount to the property value (often the appraised value). With the property's value fixed, increasing the loan amount raises the numerator while the denominator stays the same, so the LTV goes up. That’s why increasing the first loan amount is the action that increases LTV. For context, raising the appraised value would push the denominator up, lowering LTV if the loan stays the same. Increasing the down payment lowers the loan amount relative to value, also lowering LTV. Increasing the sale price doesn’t inherently change the LTV unless it changes the amount financed or the value used in the calculation, so it doesn’t reliably increase LTV. For a concrete example, if the value is 200,000 and the loan is 120,000, the LTV is 60%; increasing the loan to 150,000 raises the LTV to 75%.

LTV is the ratio of the loan amount to the property value (often the appraised value). With the property's value fixed, increasing the loan amount raises the numerator while the denominator stays the same, so the LTV goes up. That’s why increasing the first loan amount is the action that increases LTV.

For context, raising the appraised value would push the denominator up, lowering LTV if the loan stays the same. Increasing the down payment lowers the loan amount relative to value, also lowering LTV. Increasing the sale price doesn’t inherently change the LTV unless it changes the amount financed or the value used in the calculation, so it doesn’t reliably increase LTV. For a concrete example, if the value is 200,000 and the loan is 120,000, the LTV is 60%; increasing the loan to 150,000 raises the LTV to 75%.