The Jones have $72,000 in savings available for up-front costs on a home purchase. They qualified for a 30-year mortgage at 5.5% APR. They also expect closing costs to total $3,000. They have budgeted $2,500 per month to allocate to housing costs, including monthly nonfinancing costs of $150 for homeowner's insurance, $585 for property taxes, $130 for repairs, and $60 for maintenance. What is the maximum they can afford to pay for a home?

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The Jones have $72,000 for a down payment and closing costs, leaving $69,000 for the down payment after $3,000 in closing costs. Their monthly budget for the mortgage payment is $2,500 minus $925 for non-financing costs, leaving $1,575 for the mortgage. Using a 5.5% APR for a 30-year mortgage, the maximum loan amount they can afford is approximately $277,392. Adding the $69,000 down payment, the maximum home price they can afford is $346,392.

The Jones Have $72,000 in Savings Available for Up-Front Costs