# A young engineer wishes to buy a house but can afford monthly payments of only $500. Thirty-year... ## Question: A young engineer wishes to buy a house but can afford monthly payments of only$500. Thirty-year loans are available at 6% interest compounded monthly. If she can make a $50000 down payment, what is the price of the most expensive house that she can afford to purchase? ## Mortgage Loan The affordability of a mortgage loan is dependent upon the amount of the mortgage, the interest rate charged, the number of years, and the monthly payment. ## Answer and Explanation: The answer is$133,396

The formula is:

{eq}PV=PMT/(i/(1-((1+i)^{-n}))) {/eq} where PMT equals the \$500, i equals the interest rate (6%), and n...

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