Question

You want to purchase a house in 7 years. The estimated cost is $180,000.00 and you want to make a 20% down payment. How much do you need to save per month in order to cover your down payment?

Answer 1

$428.57

Explanation:

Estimated cost of the house = $180,000

Down payment = 20% of the Estimated cost of the house

The amount of down payment =

= 20% × $180,000

= 20÷ 100 × $180,000

= $36,000

The amount of Down payment to pay = $36,000

Amount to save per month to cover down payment is calculated as

Number of year to save = 7 years

1 year = 12months

7 years = 12 months × 7 years

7 years = 84 months

Hence the amount to save per month = Down payment ÷ number of months

= $36,000 ÷ 84 months

= $428.57

Hence, I need to save $428.57 per month to in order to cover my down payment.

Answer 2

$428.57

Explanation:

20% of $180,000 = $36,000

Number of months in 7 years = 12 months x 7= 84

To cover your down payment we divide 20% down payment for the house purchase cost by the Number of months in the 7 years time period;

= 36,000 / 84

= $428.57

Therefore, you will need to save at least $428.57 monthly to cover the 20% down payment.