The Loan-to-Value (LTV) ratio is the maximum amount a lender will lend to finance a loan collateralized by real estate. The loan is based on a percentage of either the purchase price or the appraisal, whichever is less. The 20% down payment lenders traditionally required with conventional financing put homeownership beyond the reach of many Americans. FHA fully-insured financing substantially lowers the down payment lenders require for the purchase of a home because FHA mortgage insurance minimizes lender risk in the event of borrower default. All of the following statements are incorrect, except: