• You are ready to buy a house and you have $20,000 for a down payment and closing costs. Closing costs are estimated to be 4% of the loan value.
• You have an annual salary of $36,000
• The bank is willing to allow your montly mortgage payment to be equal to 28% of your monthly income.
• The interest rate on the loan is 6% per year with montly compounding (.5% per month) for a 30 year fixed rate loan.

How much money will the bank loan you? How much can you offer for the house?