GRE Problem Solving Question 209
To obtain an FHA mortgage for $50,000 or more, the home buyer must have a down payment equal to 4 percent of the first $25,000 of the mortgage amount and 5 percent of the portion in excess of $25,000. At settlement the buyers pays a mortgage-insurance premium equal to 3 percent of the mortgage amount. What is the maximum FHA mortgage, if any, a buyer can obtain if the buyer has only $6,000 available for the down payment and insurance premium?
- A $62,500
- B $71,875
- C $78,125
- D $125,000
- E The home buyer cannot obtain an FHA mortgage.
Correct Answer: C