Question

Housing cost: $345,000

Number of years (T) = 30

How much are the Real Estate taxes?

Rate of Interest: (R) = 4.553%

Down payment 20% of asking price

What is the Principal of the loan?

What is the Interest of the loan?

Suppose that in order to qualify for the loan, the total monthly amount paid cannot exceed 30 percent of monthly income. What is the minimum monthly income needed to qualify for the loan? What is the minimum annual income needed? This is a simplified minimum income requirement calculation, as it does not take into account other costs such as insurance or other loans or assets currently held.

Monthly Income: 5,390.00

Annual Income: 64,680.00

Answer 1

Downpayment = 0.2*$345,000 = $69,000

Loan principal = $345,000 - $69,000 = $276,000

Monthly mortgage amount = M = (P*r*(1+r)^n)/((1+r)^n - 1)

r= 4.553%/12 = 0.3794%

n = 30*12 = 360 months

M = $1,407.16

Total mortgage paid for 30 years = M * 360 = 506,577.6

Therefore, total interest paid = $506,577.6 - $276,000 = $230,577.6

Minimum monthly income needed = X

1407.16 = 30% * X

X = $4,690.533

Minimum annual income needed = Y = 12* X = 12 * $4,690.533 = $56,286.4