Eli is buying a townhouse that costs $276,650. He has $28,000 in savings and earns $4,475 a month. Eli would like to spend no more than 30% of his income on his mortgage payment. Which loan option would you recommend to Eli?

Eli’s maximum mortgage payment is 30% of $4,475, or $1,342.50 per month. With 10% down, he would borrow $248,985; at 5% interest for 30 years, the principal-and-interest payment is about $1,337 per month, which is within his limit. The $27,665 down payment is also covered by his $28,000 in savings. The other choices have higher estimated monthly payments, so the 30-year fixed loan with 10% down at 5% is the best fit.

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