Question

If the bank gave John a 90% loan on a house valued at $88,500, how much additional cash must he produce as a down payment if he already paid $4,500 in earnest money?

Answer 1

John must produce an additional $8,850 as a down payment.

Step-by-step explanation:

In this scenario, the bank gave John a 90% loan on a house valued at $88,500. This means the bank is willing to finance 90% of the house's value. To calculate how much additional cash John needs to produce as a down payment, we subtract the loan amount from the house's value.

Loan amount = 90% of $88,500 = $79,650

Down payment = House value - Loan amount

Down payment = $88,500 - $79,650 = $8,850

John needs to produce an additional $8,850 as a down payment.