3. Although a down-payment of 20% is typical for a home purchase, homebuyers of modest means can qualify for a loan insured by the Federal Housing Administration (FHA) with a down payment as little as 3%. The political intent is to broaden home ownership among low-tomoderate income households.

a. Suppose a household uses such a loan to buy a $200,000 home. What leverage ratio does its 3% downpayment represent?