Scenario 1

Hour 2 PreCalc Finance Project

By Eryn Samuelson

Meet Brent

Upon completing high school, Brent became a construction foreman. At 24 years old, he is eager to buy his first home! Earning an annual salary of $60,000 ($5000 per month), Brent can buy a decently sized home in a nice area.

Monthly Amount

Total Amount

Rules of Thumb

Mortgage financier, Freddie Mac, suggests that your mortgage payment should be no more than 25% of your income (25% of Brent's annual income is $11,250 and 25% of his monthly income is $1250). Credit Suisse, a financial services company, recommends that 1/3 of your income goes toward housing (1/3 of Brent's annual income is $20,000 and 1/3 of his monthly income is about $1,666).


Using these two tips as guidelines, Brent concludes that he can afford to borrow between $1250 and $1,666 per month. Based on a 4.734% interest rate, he could afford to borrow between $240,069 and $319,964 (Shown in the picture below).

Interest Rate

Right now, the annual percentage rate for a 30-year fixed rate loan is 4.734%.


Minimum Payment

Increased Principle-Saving Time and Money