“Zillow Home Loans” has a policy that a borrower's monthly mortgage payment (P&I) should not exceed...

“Zillow Home Loans” has a policy that a borrower's monthly mortgage payment (P&I) should not exceed 25% of his/her monthly gross income. The borrower’s monthly income is $4,000. What is the maximum loan amount eligible to the borrower on a fixed rate loan with a 6% rate with a term of 30 years?

Expert Solution

monthly installment=4000*25%=1000

maximum loan amount eligible to the borrower

=1000*((1-(1+(6%/12))^(-30*12))/(6%/12))

=166791.61

jeff jeffy answered 2 years ago

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