You would like to buy a $350,000 house using a conventional 30-year fixed rate mortgage. The interest rate on 30-year mortgages is currently 8%. Your property tax and home insurance combined are $500/month, and you have $400/month in other debt payments.

a. What is your minimum down payment (% and $)?

b. How much mortgage financing will you need assuming you only pay the minimum down payment?

c. What will the mortgage cost you per month? (Show your inputs)

d. How much do you need to earn on a monthly basis to qualify for the mortgage you need:

i. Based on your income?

ii. Factoring in property tax and homeowners insurance in addition to your mortgage payment?

iii. Factoring in your other debt in addition to property tax, homeowners insurance and your mortgage payment?

iv. In light of your responses to (i) (iii) above, how much do you need to earn on a monthly basis to qualify for the mortgage?

e. if your monthly earnings are 10% less than the amount you came up with in [d (iv)] above, what options might you have?