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Determine the size of a mortgage that a couple would qualify for assuming that their gross...

Determine the size of a mortgage that a couple would qualify for assuming that their gross annual income is $300,000, a 30 year mortgage, and the mortgage rate is 3.75%. In addition , assume the property tax and school tax are $15,000, homeowners insurance is $1,200, and we use 30% of gross income as the cash flow guidelines.

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Answer #1

Given,

Gross income= $300,000 per year and Maximum loan payment as per guidelines= 30%

Therefore, maximum loan payment = 300,000*30% = $90,000 per year

Also given,

Taxes= $15,000 and insurance= $1,200 per year

Net amount available for mortgage payment per month= [90000-(15000+1200)]/12

=$73,800/12= $6,150

Mortgage size permissible with the above monthly payment= $1,327,962.20

Calculations as below:

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