Question

Julio just bought a $267,900 house. He had a 20 year mortgage with a fixed rate of 5.875%. Julio’s monthly payments are $1,558.09. What percent of the purchase price was Julio’s down payment?
a.
13%
b.
15%
c.
18%
d.
20%

Answer 1

Use the mortgage payment formula M = L * r / (1 - (1+r)^-n).

r = 0.05875/12, n = 240, M = 1558.09
Solve for loan L:
L = M*(1 - (1+r)^-n)/r ≈ $219,655

Down payment = 267,900 - 219,655 ≈ $48,245
Percent = 48,245 / 267,900 ≈ 0.180 ≈ 18%

Answer: c. 18%