You are currently seeking to finance your first house. The price is $400,000. You can make a down payment of $40,000, but you must obtain a mortgage (loan) for the other $360,000. Thanks to a special first time homebuyers program, your bank is willing to give you a 30-year, 4.8% APR loan for the amount. Interest on the loan will be compounded monthly.

a) Calculate your monthly payment on the mortgage, assuming that the payments begin one month from the day you purchase the house.

b) You estimate that the largest payments you can afford are $1,250 per month. Calculate the maximum loan you can afford if you are only able to pay $1,250 per month given the information above.