Question

Suppose you take out a 20-year mortgage for a house that costs $375,467. Assume the following:

• The annual interest rate on the mortgage is 5%.
• The bank requires a minimum down payment of 17% at the time of the loan.
• The annual property tax is 1.6% of the cost of the house.
• The annual homeowner's insurance is 1.1% of the cost of the house.
• The monthly PMI is $51
• Your other long-term debts require payments of $762 per month.

If you make the minimum down payment, what is the minimum gross monthly salary you must earn in order to satisfy the 28% rule and the 36% rule simultaneously?

Answer 1

Cost of house: $375,467

Down payment: @17%

Therefore, loan amount= Cost*(1-Down payment)= $375,467*(1-0.17) = $311,637.61

Monthly payment of this mortgage is $2,056.67 as follows:

Minimum gross salary to be earned is $10,544.54 as follows: