You want to purchase a beach house for $220,000 funding as much of the cost as possible with a home mortgage loan. Banks are currently offering standard thirty year mortgages at 8% (monthly compounding). Unfortunately, you can only afford payments of $1,500 per month. How much cash will you need for a down payment in order to buy the home? (Round to the nearest dollar)

Question

Quizplus · Accepted Answer

To find the down payment, first calculate the maximum loan amount you can afford with $1,500 monthly payments at 8% interest over 30 years. Using the formula for monthly mortgage payments, the maximum loan amount is approximately $204,425. Subtract this from the house price ($220,000 - $204,425) to find the down payment needed, which is approximately $15,575.

You Want to Purchase a Beach House for $220,000 Funding