Marcia wants to buy a home. Her monthly gross income is $12,500. She currently has a car payment of $750/month and a student loan payment of $600/month. The bank wants escrow $1,100/month for taxes and insurance. The bank requires the following income and loan ratios;

-a minimum down payment of 20%,

-a P&I ratio < 25%,

-a P, I, T, & HI ratio < 28%

- a P, I, T, HI and other debt service ratio < 33% and

-a LTV ratio of 80% or less.

A. What is the maximum market value of a home that Marcia could purchase given a current market rate on a 30-year fixed rate loan is 5.20%?

B. How much must Marcia have for the down payment?