Suppose your gross monthly income is $5,200 and your current monthly payments are $625. If the bank will allow you to pay up to 36% of gross monthly income (less current monthly payments) for a monthly house payment, what is the maximum loan you can obtain if the rate for a 30-year mortgage is 4.65%? (Round your answer to the nearest cent.

Answer 1

Allowable monthly payment
= 5200*.36 - 625 = 1247

Present value of possible mortgage:
i = .0465/12 = .003875
n = 30*12 = 360

PV = 1247(1 - 1.003875^-360)/.003875
= .....