Question

A couple is required by their lender to have a down payment of 20% of the purchase price of the home they want to buy. If the couple has saved $35,000, what is the most expensive home the couple can afford to buy? a. $63,000 b. $140,000 c. $175,000 d. $210,000 Please select the best answer from the choices provided A B C D.

Answer 1

The most expensive home the couple can afford to buy a home is $175,000 having a down payment of 20%.

The computation of the total amount of expenses for home

Given,

The percentage of the down payment from the complete amount of purchase is 20%.

The total amount of saving by the couple is $35,000.

For calculating the maximum amount for buying the most expensive home the total amount of saving is assumed to be equal to the percentage of down payment.

Thus, if $35,000 is equal to 20% of the total amount then what will be the total amount?

This is computed as follows:

$\begin{aligned}\text{Amount}&=\dfrac{\text{Total Savings}}{\text{\% of Down Payment}}\times100\\&=\dfrac{\ 35,000}{20}\times100\\&=\ 175,000\end{aligned}$

Therefore, the maximum amount that can be afforded by the couple to buy the most expensive home is $175,000.

Learn more about the down payment, refer to the link:

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