Question

5. Suppose you take a 10-year mortgage for a house that costs $242,267. Assume the following:

• The annual interest rate on the mortgage is 3.5%.
• The bank requires a minimum down payment of 11% of the cost of the house.
• The annual property tax is 1.5% of the cost of the house.
• The annual homeowner's insurance is $929.
• The monthly PMI is $97.
• Your other long-term debts require payments of $1,571 per month.

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

Round your answer to the nearest dollar.

Answer 1

Given,

Cost of the house= $242,267

Down payment= 11%

Therefore, amount of loan= Cost* (1-Down payment)= $242,267*0.89= $215,617.63

Monthly payments= $2132.15 as follows:

Minimum gross monthly salary required in order to satisfy the 36% Rule = $9,523.34

Details as follows: