VERIFY BEFORE RELYING

This is exam-prep math. The 80% LTV (loan-to-value) recognition line for conventional PMI (private mortgage insurance), the 80% borrower-requested cancellation point, the 78% automatic-termination point, and the "lower of sale price or appraised value" original-value concept are explained by the Consumer Financial Protection Bureau (CFPB) and Homeowners Protection Act / PMI Cancellation Act materials. CFPB guidance and lender practice can change between exam windows, and FHA mortgage insurance premium (MIP) and VA funding-fee rules are governed by separate federal agencies. For exam purposes, study the framework. For a real transaction, refinance, or PMI-removal request, verify against the current CFPB guidance, the current DBPR (Department of Business and Professional Regulation) Sales Associate Candidate Information Booklet, and qualified lender or counsel.

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%. For conventional PMI, treat 20% down / 80% LTV as the key exam recognition line, then keep PMI cancellation separate: CFPB explains borrower-requested cancellation at scheduled 80% of original value and automatic termination at scheduled 78% of original value for many covered loans.

WHO THIS GUIDE IS FOR

Florida sales associate candidates who keep mixing up LTV with down payment, PMI threshold, or qualifying ratios on math questions. Useful whether math is your strongest topic and you want to lock in the 80/20 split, or your weakest and you need a structured reference for the four-direction LTV math. Pair with the PITI (principal, interest, taxes, insurance) and qualifying ratio guide for the DTI (debt-to-income) side, the FHA / VA / conventional loan guide for the loan-type distinctions, and the math formulas guide for the broader 14 calculation type math catalog, the T-bar method guide for placing loan amount over value visually, and cross multiplication for solving loan / value = LTV / 100. Not lender, mortgage, or financial advice.

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.

80%
Conventional PMI recognition line per CFPB
78%
Automatic PMI termination point per CFPB
Lower of two
Common exam-prep denominator rule when sale price and appraisal differ

What this guide covers

  • What the exam is really testing
  • The four LTV directions
  • The 80/20 answer filter
  • Worked example 1: 80% LTV is not 20%
  • Worked example 2: the PMI threshold move
  • PMI, MIP, and funding fee: read the loan type
  • Worked example 3: LTV vs qualifying ratio
  • Sale price, appraisal, and the denominator
  • Read the wrong answers
  • Related drills
  • Exam-style questions
  • FAQ

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 Four LTV Directions

Most LTV questions are one of four directions. Name the direction before you calculate.

Given Asked for Setup Trap
Loan amount and value LTV Loan / value x 100 Answering the down-payment side
Value and LTV Loan amount Value x LTV decimal Treating the LTV as the down payment
Value and down payment Loan amount or LTV Value - down payment, then loan / value Forgetting to subtract first
LTV Down payment percentage 100% - LTV Saying 80% down when the loan is 80%

The exam can hide the direction in the last sentence. Read that last sentence before touching the calculator.

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:

  1. Circle the ask: LTV, down payment, loan amount, PMI, front-end ratio, or back-end ratio.
  2. Label the loan amount.
  3. Label the property value used in the LTV base.
  4. Convert between LTV and down payment only if the question asks for the other side.
  5. 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.

LABEL THE ASK, THEN DIVIDE

80% and 20% are both real. Only one answers the question.

The whole skill is reading the last sentence and labeling the denominator before the calculator comes out. The free LTV and down payment calculator checks your setup, and Pass Florida drills the same 80/20 switch in mixed Florida-specific math for one $39.99 purchase. No subscription. No copied exam questions.

Open the LTV calculator · Download Pass Florida

PMI, MIP, and Funding Fee: Read the Loan Type

Do not apply conventional PMI language to every mortgage stem.

Loan type in the stem Exam-safe label What to do
Conventional loan PMI Compare LTV to the 80% recognition line
FHA loan MIP Do not call it PMI; FHA mortgage insurance uses separate HUD rules
VA loan Funding fee Do not call it PMI; VA says the program does not require monthly mortgage insurance
Generic mortgage question Use the stem If the stem says PMI, follow PMI; if it says FHA or VA, switch labels

This is a vocabulary trap as much as a math trap. The exam can give a correct 95% LTV calculation and still ask which mortgage-insurance term fits the loan type.

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.

CFPB's PMI cancellation guidance uses "original value" language and generally describes that value as the lower of the contract sales price or the appraised value at purchase. For basic Florida exam-prep LTV questions, follow the value the stem says the lender uses. If the stem gives both sale price and appraised value without further explanation, check the lower value first.

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.

Use these after the setup feels clear:

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, a 19-topic diagnostic, Confidence Calibration, and lifetime updates. $39.99 once. No subscription. No copied exam questions.

Download Pass Florida · try 5 questions first

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.

Question 4

A buyer agrees to purchase a property for $390,000. The property appraises for $375,000. The lender bases the loan on the appraised value and approves a $300,000 conventional loan. What is the LTV for exam purposes?

A. 76.9%

B. 80%

C. 20%

D. 95%

Answer

Correct answer: B. The stem says the lender bases the loan on the appraised value, so use $375,000 as the denominator. $300,000 / $375,000 = 0.80, or 80%. Option A uses the sale price. Option C is the down-payment side. Option D is unrelated to the values given.

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 exam questions.

Start a math drill

Ready to lock in the 80/20 split?

LTV becomes free points when the ask line is automatic and the denominator is labeled before the calculator comes out. The candidates who consistently answer correctly identify whether the question wants LTV, down payment, loan amount, PMI threshold, or a qualifying ratio first, then label the loan base, then divide. Pass Florida drills those setup switches alongside PITI, proration, millage, and the other Florida math calculation types.

Methodology

This guide was reviewed against the current Department of Business and Professional Regulation (DBPR) Florida Real Estate Sales Associate Candidate Information Booklet, Pearson VUE Florida Real Estate testing page, Consumer Financial Protection Bureau (CFPB) guidance on private mortgage insurance and PMI removal, CFPB Homeowners Protection Act / PMI Cancellation Act examination procedures, HUD FHA mortgage insurance premium guidance, and VA funding-fee guidance as of the June 26, 2026 review, when every worked calculation was re-checked. The post is scheduled for re-verification by December 26, 2026 on a 6-month regulatory cadence to match CFPB, HUD, VA, and DBPR refresh windows. The article focuses on how LTV, down payment, PMI thresholds, loan-type vocabulary, and qualifying-ratio confusion appear in exam-style questions, common traps, and practical study decisions. The 80/20 Answer Filter and four-direction LTV table are independent Pass Florida pedagogy derived from common candidate mistakes, not a CFPB, HUD, VA, or lender process. 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. It does not replace the Florida Real Estate Commission (FREC) approved 63-hour course, DBPR processes, Pearson VUE scheduling, or qualified lender, mortgage, or legal advice.

Product Note

Pass Florida is an educational exam-prep tool for Florida sales associate candidates and is our Florida-specific exam-prep app, so the relationship is direct and disclosed. It includes 1,002 Florida-specific practice questions, a 19-topic diagnostic, six modes, Math Coach across the 14 Florida math calculation types, Trap Library, Confidence Calibration, offline access, optional sync, lifetime updates, and one $39.99 purchase. No subscription. No copied exam questions. Pass Florida is independent exam preparation, not a DBPR-approved pre-licensing course, lender, mortgage advisor, or guarantee of passage.

Sources

This post is exam preparation content for the Florida Real Estate Sales Associate exam. It is not legal, tax, financial, lending, appraisal, brokerage, insurance, title, closing, mortgage, or professional advice. CFPB rules and guidance on PMI, the Homeowners Protection Act / PMI Cancellation Act, and lender practice around the 80% recognition line and the 78% automatic-termination point can revise between exam windows. FHA mortgage insurance premium (MIP) and VA funding-fee rules are governed by separate federal agencies. For real-world decisions, verify against the current primary source and consult a qualified licensed Florida professional, lender, or mortgage advisor. Studying with Pass Florida or any other exam-prep tool does not guarantee passage of the state exam.