QUICK ANSWER
To solve LTV questions on the Florida real estate exam, use LTV = loan amount / property value x 100. Then check what the question asks for: LTV percentage, down payment, loan amount, PMI threshold, or a separate qualifying ratio, because most misses come from answering 80% when the stem asks for 20%.
EXAM PREP ONLY
This post explains how this topic appears on the Florida real estate sales associate exam. It is not legal, tax, lending, appraisal, brokerage, title, insurance, closing, or professional advice. For a real transaction or real-world decision, verify current requirements with the official source or consult a qualified licensed Florida professional.
LTV questions look easy until the answer choices include both sides of the same deal: 80% LTV and 20% down, 95% LTV and 5% down, loan amount and down payment amount. The arithmetic is short. The trap is answering the right setup with the wrong side of the ratio.
This is now the canonical LTV walkthrough for Pass Florida: the formula, the 80/20 split, PMI recognition, wrong denominator traps, and the same-stem confusion with PITI and qualifying ratios.
What The Exam Is Really Testing
On the Florida sales associate exam, LTV is usually tested as a setup problem, not a hard calculation. The stem may give sale price, appraised value, loan amount, down payment, monthly income, PITI, or other debts. Some of those numbers belong in LTV. Some belong in a different lending calculation. Your job is to sort the role of each number before the calculator comes out.
Keep these roles separate:
| If the stem asks for | Use this relationship | Trap answer |
|---|---|---|
| LTV percentage | Loan amount / property value x 100 | Down payment percentage |
| Down payment percentage | 100% - LTV | LTV percentage |
| Loan amount | Property value x LTV | Down payment amount |
| PMI threshold | Compare conventional LTV to 80% | Treat PMI as a formula |
| Qualifying ratio | Monthly debt / monthly income | Use property value instead |
The same facts can produce multiple correct numbers, but only one number answers the question asked.
PATTERN TO NOTICE
LTV questions often start with "a buyer purchases" and then give a sale price, appraised value, loan amount, or down payment. If you see several property and loan numbers in one stem, your first job is to identify the denominator before you divide.
The 80/20 Answer Filter
The 80/20 Answer Filter is a short pause before you choose an answer. Use it whenever the stem includes LTV, down payment, PMI, or qualifying ratios:
- Circle the ask: LTV, down payment, loan amount, PMI, front-end ratio, or back-end ratio.
- Label the loan amount.
- Label the property value used in the LTV base.
- Convert between LTV and down payment only if the question asks for the other side.
- If PMI appears, compare the conventional loan's LTV to 80%.
That last step matters because 80% and 20% often appear in the same answer set. One is the loan side. One is the borrower-equity side.
Here is the scratch-paper version:
Ask: ____
Loan amount: ____
Property value: ____
LTV: loan / value = ____%
Down payment side: 100% - LTV = ____%
PMI clue: above 80% LTV? ____
DTI/PITI clue: monthly debt / monthly income? ____
If the question asks for LTV, do not answer with the down payment. If it asks whether PMI is likely on a conventional loan, do not calculate PITI. If it asks for a qualifying ratio, stop using the property value.
Worked Example 1: 80% LTV Is Not 20%
A buyer purchases a property for $400,000. The property appraises for $400,000. The buyer obtains a conventional loan for $320,000. What is the LTV?
Step 1: Divide loan amount by property value.
$320,000 / $400,000 = 0.80
Step 2: Convert to a percent.
0.80 x 100 = 80%
Answer: 80% LTV
The down payment side is different:
$400,000 - $320,000 = $80,000 down
$80,000 / $400,000 = 20% down
Both 80% and 20% are real numbers in the setup. If the question asks for LTV, the answer is 80%. If it asks for down payment percentage, the answer is 20%.
The 20% is real. It just answers a question the exam did not ask.
Worked Example 2: The PMI Threshold Move
A buyer purchases a $350,000 home with 5% down using a conventional loan. The sale price and appraised value are the same. What is the LTV, and what PMI clue should you notice for exam purposes?
Step 1: Find the down payment.
$350,000 x 0.05 = $17,500
Step 2: Find the loan amount.
$350,000 - $17,500 = $332,500
Step 3: Find LTV.
$332,500 / $350,000 = 0.95
0.95 x 100 = 95%
Answer: 95% LTV
For a conventional loan, above 80% LTV points toward a private mortgage insurance clue. The Consumer Financial Protection Bureau explains that paying 20% down generally means PMI is not required with a conventional loan.
On most LTV setup questions, treat 80% as the recognition line. If a stem mentions automatic PMI termination, separate that from the 80% threshold: the CFPB explains automatic termination is generally tied to the date the loan balance is scheduled to reach 78% of the home's original value.
Worked Example 3: LTV vs Qualifying Ratio
A buyer is purchasing a property valued at $375,000 with a $300,000 loan. The buyer has monthly income of $6,000, monthly PITI of $1,680, and other monthly debts of $420.
If the question asks for LTV:
$300,000 / $375,000 = 0.80
0.80 x 100 = 80% LTV
If the question asks for the front-end ratio:
$1,680 PITI / $6,000 income = 0.28
0.28 x 100 = 28%
If the question asks for the back-end ratio:
($1,680 PITI + $420 other debts) / $6,000 income = 0.35
0.35 x 100 = 35%
Same stem. Three different ratios.
That is the point. LTV compares loan amount to property value. Qualifying ratios compare monthly debt to monthly income. Both produce percentages, so the answer choices can look related even when they come from different formulas.
Sale Price, Appraisal, And The Denominator
The denominator is the property value used for the loan-to-value comparison. Many exam-prep LTV items use the lower of sale price or appraised value when both are provided, because lending risk is tied to collateral value.
If the stem tells you which value the lender uses, follow the stem. Example:
A buyer agrees to buy a property for $410,000. The property appraises for $400,000. The lender bases the loan on the appraised value. The loan amount is $320,000. What is the LTV?
$320,000 / $400,000 = 0.80
0.80 x 100 = 80%
Answer: 80% LTV
If you used the $410,000 sale price, you would get about 78.05%. That is a clean-looking wrong answer. The exam loves clean-looking wrong answers.
Read The Wrong Answers
LTV questions are good practice for a larger exam skill: wrong answers often reveal the trap.
| Wrong answer | What probably happened | Repair |
|---|---|---|
| 20% instead of 80% | Answered down payment side | Recheck the ask line |
| 80% instead of 20% | Answered LTV when down payment was requested | Use 100% - LTV |
| 0.80 instead of 80% | Left answer as decimal | Convert to percent |
| $357,000 instead of 85% | Solved for loan amount instead of LTV | Match the answer format to the ask |
| 78.05% when the answer is 80% | Used sale price when the stem used appraised value | Label the loan base before dividing |
| DTI answer appears | Used monthly income instead of property value | Separate LTV from qualifying ratios |
| 28% or 35% appears | Solved front-end or back-end ratio | Check whether the ask mentions income |
| Sale-price answer appears | Used the visible price instead of the loan base | Label the denominator before dividing |
| PMI answer appears on an FHA or VA stem | Applied a conventional-loan clue to another loan type | Read the loan type first |
Do not just mark the correct answer and move on. If you can name why the wrong answer was tempting, the next LTV question gets easier.
Related Drills
Use these after the setup feels clear:
- Pair LTV with PITI and qualifying ratio practice when the stem includes monthly income and PITI.
- Pair LTV with FHA, VA, and conventional loan review when mortgage insurance language appears.
- Check your setup with the LTV and down payment calculator only after you have already chosen the formula.
DRILL THE TRAP, NOT JUST THE FORMULA
Make the 80/20 split automatic before exam day.
Use Math Coach and Trap Library to drill whether a miss came from the LTV formula, the down-payment complement, the PMI threshold, or DTI confusion. Includes 1,002 Florida-specific questions. $39.99 once, no subscription, no copied state exam questions.
Exam-Style Questions
Question 1
A buyer purchases a home for $420,000. The home appraises for $420,000. The buyer makes a $63,000 down payment and obtains a conventional loan for the balance. Which statement is correct for exam purposes?
A. The LTV is 15%, because the down payment percentage controls the loan-to-value ratio.
B. The LTV is 85%, and the loan is above the common 80% conventional PMI threshold.
C. The LTV is 80%, because the PMI threshold caps the calculation.
D. The LTV cannot be calculated unless the buyer's monthly income is provided.
Answer
Correct answer: B. The loan amount is $420,000 - $63,000 = $357,000. The LTV is $357,000 / $420,000 = 0.85, or 85%. Option A gives the down payment percentage, option C treats the PMI threshold as a cap, and option D confuses LTV with qualifying-ratio math.
Question 2
A buyer is purchasing a property for $500,000. The property appraises for $500,000. The buyer wants an 80% LTV conventional loan. How much is the down payment?
A. $100,000
B. $400,000
C. $80,000
D. $500,000
Answer
Correct answer: A. An 80% LTV loan means the loan is 80% of $500,000, or $400,000. The down payment is the remaining 20%, or $100,000. Option B is the loan amount, not the down payment.
Question 3
A buyer purchases a property valued at $360,000 with a $288,000 loan. The buyer has monthly income of $7,000 and monthly PITI of $1,960. The question asks for the LTV. Which answer is correct?
A. 28%
B. 80%
C. 20%
D. 72%
Answer
Correct answer: B. LTV is $288,000 / $360,000 = 0.80, or 80%. Option A is the front-end qualifying ratio using PITI and monthly income. Option C is the down payment side. Option D is what happens when a student subtracts the 28% front-end ratio from 100%, mixing two unrelated formulas.
FAQ
What is the LTV formula for the Florida real estate exam?
LTV = loan amount / property value x 100. The answer is expressed as a percentage, so 0.80 becomes 80%.
How do I calculate the loan amount from LTV?
Multiply the property value by the LTV percentage as a decimal. A $300,000 property at 80% LTV gives a $240,000 loan because $300,000 x 0.80 = $240,000.
How are LTV and down payment connected?
For a simple purchase with no other loans, down payment percentage is 100% minus LTV. An 80% LTV setup means 20% down, while a 95% LTV setup means 5% down.
What LTV usually triggers PMI on exam questions?
For exam purposes, conventional PMI is commonly connected to loans above 80% LTV, or less than 20% down. FHA and VA loans are tested differently from conventional PMI, so do not treat every loan type like a conventional loan.
Is PMI the same as FHA mortgage insurance?
No. PMI usually refers to private mortgage insurance on conventional loans. FHA loans use mortgage insurance premium language, often shortened to MIP, and VA loan questions may use funding-fee language instead of PMI.
Do I use sale price or appraised value for LTV?
Use the value the stem tells you the lender is using. If the question gives both sale price and appraised value and makes the lender's collateral value relevant, the lower value is usually the exam-prep habit to check first.
How is LTV different from DTI or PITI?
LTV compares the loan amount to property value. DTI and PITI questions use monthly debts, monthly payment, and monthly income. If the stem asks for a qualifying ratio, property value may be a distractor.
What if the question gives LTV and asks for the down payment amount?
Find the down payment percentage first by subtracting LTV from 100%. Then multiply the property value by that down payment percentage. For example, 90% LTV means 10% down.
Does Pass Florida replace the 63-hour course or lender advice?
No. Pass Florida is exam preparation only. It does not replace the 63-hour pre-license course, DBPR processes, Pearson VUE scheduling, or legal, tax, lending, appraisal, brokerage, title, closing, or professional advice.
READY FOR MIXED MATH?
You just separated LTV, down payment, PMI, PITI, and DTI.
The Florida sales associate exam can mix LTV with PITI, proration, and millage inside the same math block. Math Coach drills those setup switches, and Trap Library names the mistake behind each miss. Pass Florida is $39.99 once, with no subscription and no copied state exam questions.
Methodology
This guide was written for Florida sales associate exam candidates. It focuses on how LTV, down payment, PMI thresholds, and qualifying-ratio confusion appear in exam-style questions, common traps, and practical study decisions. Official sources are listed below where applicable. Requirements, fees, policies, and laws can change, so verify current details with the official source before making a real-world decision.
Pass Florida is exam prep only. The app provides 1,002 Florida-specific questions and practice tools, but it does not replace the 63-hour course, DBPR processes, Pearson VUE scheduling, or qualified professional guidance.
