Answer:
$3,131
Explanation:
The largest amount of down payment can occur in a situation where all the $40,000 is spend for the down payment and closing costs.
Let assume
X is the amount of closing cost While Y is the Amount of down payment
X + Y = $40,000 equation (1)
Purchase price = $330,000 + $20,000
= $350,000
X = ($350,000 - Y) x 1% equation (2)
Let Substitute (2) to (1):
($350,000 - Y) x 1% + Y = $40,000
Y = $36,869
Hence:
X = $40,000 - $36,869 = $3,131
Therefore largest amount they can use for a down payment and still pay the closing costs will be $3,131
