Question 144647
Solve {{{0.20x=30000}}} to get the maximum total purchase price that Dave can pay without paying PMI.


Calculate: {{{(P((1 + r)^n)r)/((1 + r)^n - 1)}}}, where P is the principal amount of the loan (total purchase price minus down payment: 150,000 from the first part of the problem minus 30,000 is 120,000), n is the number of payment periods (monthly payments for 30 years: 30 * 12 = 360), r is the interest rate PER PERIOD (0.07/12=0.00583).


Or save yourself some serious calculator button pushing.  Open an Excel worksheet and type in the following: =pmt(.00583,360,120000)
Once you have typed it in, hit enter, you will get the monthly payment as a negative number (negative because it is presumeably coming OUT of your (or Dave's) pocket).  Don't forget to remind Dave that this amount is only Principal and Interest -- he is also responsible for property tax and fire insurance.