Question

Karina bought a townhouse for $199,900. She has a 30 year mortgage with a fixed rate of 5.5%. Karina’s monthly payments are $998.08. What percent of the purchase price was Karina’s down payment?
a.
7%
b.
12%
c.
15%
d.
18%

Answer 1

Monthly rate r = 0.055/12 = 0.0045833333, n = 360.
Loan amount P = M * (1 − (1+r)^−n)/r
= 998.08 * (1 − (1.0045833333)^−360)/0.0045833333 ≈ 998.08 * 176.15 ≈ $175,812.

Down payment = 199,900 − 175,812 ≈ $24,088 ≈ 24,088/199,900 ≈ 0.1204 ≈ 12%.

Answer: b. 12%