You find that the going rate for a home mortgage with a term of 30 years is 6.5% APR. The lending agency says that based on your income, your monthly payment can be at most $750. How much can you borrow?

Answer 1

P = Po*r*t/(1-(1+r)^-t).

r = 0.065/12mo. = 0.00542/mo. = Monthly % rate.

P = 750/mo. * 360mo. = $270,000.

P = (Po*0.00542*360)/(1-1.00542^-360) = 270,000,

(Po*1.950)/0.8571 = 270,000,
2.275Po = 270,000, Po = $118,675.38.