A home is being purchased for $275,000. The buyer agrees to an 80% loan, what amount will the buyer have to have to meet the down payment requirements?

Rationale

$55,000 is the down payment required for the home purchase.

To calculate the down payment, we first determine the loan amount by applying the 80% loan agreement to the purchase price of $275,000. This means the buyer will only need to pay the remaining 20% as a down payment, which amounts to $55,000.

A ($45,000) YOUR ANSWER

This choice represents a down payment that is only 16.36% of the purchase price ($45,000 / $275,000), which is insufficient since the buyer needs to cover 20% of the total cost.

B ($50,000) YOUR ANSWER

A down payment of $50,000 equates to 18.18% of the home's price ($50,000 / $275,000). This amount is still below the required 20% down payment, making it an incorrect option.

C ($55,000) CORRECT

This option correctly calculates the down payment at 20% of the home’s purchase price. The calculation is $275,000 x 0.20 = $55,000, fulfilling the requirement set by the buyer's loan agreement.

D ($60,000) YOUR ANSWER

While this amount exceeds the required down payment, representing 21.82% of the home price ($60,000 / $275,000), it is not necessary for the buyer to pay more than the required 20%. Thus, it is an incorrect choice.

Conclusion

The required down payment for purchasing a home priced at $275,000 with an 80% loan is $55,000, which is 20% of the purchase price. Options A, B, and D either fall short of or exceed this requirement, emphasizing that the correct down payment aligns precisely with the loan agreement stipulation.

A home is being purchased for $275,000. The buyer agrees to an 80% loan, what amount will the buyer have to have to meet the down payment requirements?

$55,000 is the down payment required for the home purchase.

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