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Math Help - Stumped by a percentages problem

  1. #1
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    Stumped by a percentages problem

    I need to create a formula to solve a problem involving loan to value ratio (LTV) on a property and total funds (TF) available. Applying 80% LTV on 100 000 property price (PP) means, bank gives 80,000 and purchaser puts down 20 000 cash deposit (CD). However CD is limited by total funds (TF) available, i.e. purchaser's cash savings. CD cannot be greater than TF.

    TF, LTV and PP are variable.

    The problem is a little more tricky for me than it seems .

    What I actually need is, given any value for TF and, LTV being between 0% and 100% what is the maximum purchase price of a property (PP).

    If i'm given a mortgage with an LTV of 100% then i know that PP can be any value
    If I'm given a mortgage with an LTV of 0% ie no mortgage then PP = TF = CD.
    Last edited by xoran; June 27th 2011 at 04:21 AM. Reason: correction
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  2. #2
    MHF Contributor
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    Re: Stumped by a percentages problem

    You have "obscured/complicated" something simple (I think)!

    You want to find the maximum mortgage amount, calculated from
    the down payment offered: given is down payment amount and 80%.

    If down payment = 12,000, then (M = mortgage amount):
    12000 = M(1 - 80/100)
    .2M = 12000
    M = 12000/.2 = 60000

    With P = given percentage and D = given down payment, formula is:
    M = D / (1 - P/100)
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