Real Estate Math

A Texas homebuyer wants to maximize their purchase price given a $2,100 maximum monthly PITI payment. Using an estimated 30-year rate of 6.5%, property taxes of $350/month, and insurance of $150/month, what loan amount can they qualify for?

A$252,685✓ Correct

B$284,253

C$315,000

D$268,450

Explanation

Available for P&I = $2,100 – $350 – $150 = $1,600/month. At 6.5% for 30 years, the monthly payment factor is approximately $6.32 per $1,000 of loan. Loan amount = $1,600 / $6.32 × $1,000 = $253,165 ≈ $252,685.

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