GRE Problem Solving Question 209

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Source: Monkey

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.

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