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25 January, 21:56

Darlene is getting an FHA-insured loan to purchase a house. The purchase price is $278,000, and she's paying 3.5% down. She will have to pay an upfront mortgage insurance premium of $4,865, which will be financed as part of the loan. What is the loan-to-value on this loan?

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  1. 25 January, 23:16
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    96.5%

    Explanation:

    Data provided in the question:

    Purchase price i. e the value = $278,000

    Down payment paid = 3.5%

    Upfront mortgage insurance premium = $4,865

    Now,

    Amount of down payment = 3.5% of loan value

    = 0.035 * $278,000

    = $9,730

    Therefore,

    The loan value = value - Amount of down payment

    = $278,000 - $9,730

    = $268,270

    Thus,

    loan-to-value on the loan = [ loan value : value ] * 100%

    = [ $268,270 : $278,000 ] * 100%

    = 96.5%
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