Duane miller wants to know what price home he can afford. his annual gross income is $60,000. he has no other debt expenses and expects property taxes and insurance to cost $400 per month. he knows he can get a 6%, 15 year mortgage so his mortgage payment factor is 8.43. he expects to make a 10% down payment. what is duane's affordable home purchase price? round your answer to the nearest $100

Question

Mathematics

Elisa Lowery

4 June, 19:47

Duane miller wants to know what price home he can afford. his annual gross income is $60,000. he has no other debt expenses and expects property taxes and insurance to cost $400 per month. he knows he can get a 6%, 15 year mortgage so his mortgage payment factor is 8.43. he expects to make a 10% down payment. what is duane's affordable home purchase price? round your answer to the nearest $100

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Jerry Kramer · Answer 1

If you use the rule that mortgage, taxes, and insurance payments should not exceed 28% of gross income, then Duane can afford $1400 in mortgage expense each month. If $400 of that is taxes and insurance, then his loan payment can be $1,000. At $8.43 per thousand of loan value, he can afford a loan for $118,624. After putting 10% down, this amount is 90% of his home purchase price.

Duane can afford a home purchase price of up to $131,800.