Question

The Williams are buying a house that costs $323,000 and can afford a 10% down payment. If the Williams want the lowest monthly payment, which loan option would you recommend?
a.
15 year fixed, 5% down at a fixed rate of 5.5%
b.
30 year FHA, 3.5% down at a fixed rate of 6.25%
c.
30 year fixed, 20% down at a fixed rate of 5.75%
d.
30 year fixed, 10% down at a fixed rate of 6%


Please select the best answer from the choices provided

A
B
C
D

Answer 1

Answer: D

Reason: compute monthly principal-and-interest for each feasible option (loan = 323,000 − down):

- A (15 yr, 5% down, 5.5%): loan = 306,850 → payment ≈ $2,505/mo
- B (30 yr FHA, 3.5% down, 6.25%): loan = 311,695 → payment ≈ $1,919/mo
- C requires 20% down (they only have 10%), so not available.
- D (30 yr, 10% down, 6.0%): loan = 290,700 → payment ≈ $1,744/mo

The lowest monthly payment is option D.