Question

Fatima saved $15,000 toward a down payment on a house. She makes $5,375 a month. What is the maximum loan she can take on a house?

A) $129,000
B) $193,500
C) $115,500
D) $144,000

Fatima has saved $15,000 toward a down payment on a house. She makes $5,375 a month. What is the maximum she can spend on a house?

A) $129,000
B) $193,500
C) $115,500
D) $144,000

Can anyone help me please.

Answer 1

It can be C or D because she can afford both. I'm guessing you go with C for now.

Answer 2

We will use $\frac{28}{36}$ ratio to determine how much can Fatima afford as a loan for her house.

Let gross income of Fatima = $ x

Amount earned by Fatima monthly= $ 5,375

36 % of 5,375=

     $\frac{36}{100}\times 5,375=1935$$

Maximum amount that can be paid as a loan monthly = $ 1935

Total money that she can pay yearly for house loan if Fatima allowable money for paying loans is $ 1935=

       $1935 \times 12=23220$$

Money saved as a down payment = $ 15,000

So, maximum amount loan Fatima can take on a house= 23220 + 15000=$38,220

She is not allowed for loan for house if the cost of house is any of the four options.

(B) 28 % of $ 5375=

   $\frac{28}{100}\times 5,375=1505$$

Maximum amount that Fatima spend on her house monthly= $ 1505

Amount that fatima can spend yearly on her house = 1505× 12 =$18,060

For the four options given , none of the option matches Fatima's expectations.