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A buyer earns $48,000\$48,000 salary per year. In order to qualify for an 8585%\% loan, his monthly PITI payment cannot be more than 2828%\% of his monthly salary. The annual taxes and insurance will be $2,352.60\$2,352.60. If the monthly principal and interest payment is $6.00\$6.00 per $1,000\$1,000 of loan amount, what is the most sales price he can afford?

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Q. A buyer earns $48,000\$48,000 salary per year. In order to qualify for an 8585%\% loan, his monthly PITI payment cannot be more than 2828%\% of his monthly salary. The annual taxes and insurance will be $2,352.60\$2,352.60. If the monthly principal and interest payment is $6.00\$6.00 per $1,000\$1,000 of loan amount, what is the most sales price he can afford?
  1. Calculate Buyer's Monthly Salary: Calculate the buyer's monthly salary.\newline$48,000/12=$4,000\$48,000 / 12 = \$4,000 per month.
  2. Determine Maximum Allowable PITI Payment: Determine the maximum allowable monthly PITI payment. 28%28\% of $4,000\$4,000 = $1,120\$1,120.
  3. Calculate Annual Taxes and Insurance: Calculate the annual cost of taxes and insurance.\newlineAnnual taxes and insurance = $2,352.60\$2,352.60.
  4. Convert to Monthly Amount: Convert the annual taxes and insurance to a monthly amount. $2,352.60/12=$196.05\$2,352.60 / 12 = \$196.05 per month.
  5. Calculate Maximum Monthly P&I Payment: Calculate the maximum monthly principal and interest payment.$1,120−$196.05=$923.95\$1,120 - \$196.05 = \$923.95.
  6. Determine Loan Amount: Determine the loan amount using the monthly principal and interest payment rate.\newline$923.95/$6.00=153.99\$923.95 / \$6.00 = 153.99 per $1,000\$1,000.
  7. Calculate Total Loan Amount: Calculate the total loan amount the buyer can afford.\newline153.99×$1,000=$153,990153.99 \times \$1,000 = \$153,990.
  8. Calculate Maximum Sales Price: Calculate the maximum sales price based on the 8585% loan.$153,990/0.85=$181,164.71\$153,990 / 0.85 = \$181,164.71.

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