Question: A family purchased a home for $210,000. They qualified for a 4.875% 30 year fixed-rate mortgage for 80% of the purchase price. They made a 20% down payment.

How much are the monthly payments?  Edit

Answer: P= 80% of 210,000 = 168000
r = 4.875% per yr = 4.875/12 = 0.40625 % per month
n = 30 yrs = 30*12 = 360 months.


M = P(1+r)^n r / [(1+r)^n-1]
= 168000(1+0.0040625)^360*0.0040625/[(1 + 0.0040625)^360 - 1]
= 889.069
Monthly payment = 889.07 (Ans.)  Edit