How big of a loan can I afford if I can afford 1250 a month for 30 years at 6% interest 

To determine how large a loan you can afford given a monthly payment of $1,250, a 30-year loan term, and a 6% annual interest rate, we use the formula for the present value of an annuity (which represents the loan amount):

\[
P = \frac{M \cdot \left(1 - (1 + r)^{-n}\right)}{r}
\]

Where:
- $P$ is the loan amount (what we are solving for),
- $M$ is the monthly payment ($1,250),
- $r$ is the monthly interest rate (6% annual interest rate, so $r = 0.06 / 12$),
- $n$ is the number of total payments (30 years $\times$ 12 months = 360 payments).

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Here are 5 related questions you might find useful:
1. How is the monthly interest rate calculated from an annual interest rate?
2. What factors influence loan affordability apart from the interest rate?
3. How does the length of the loan term affect the monthly payment?
4. How much extra do you pay in interest over the life of a 30-year loan?
5. What is the effect of making additional principal payments?

**Tip:** Refinancing your loan in the future might allow you to secure a better interest rate, reducing your monthly payments.

How big of a loan can I afford if I can afford 1250 a month for 30 years at 6% interest

Learn how to calculate the loan amount you can afford with a monthly payment of $1,250, a 30-year term, and a 6% interest rate. This guide covers key finance mathematics concepts, including loan amortization and the present value of an annuity formula, ideal for students in Grades 10-12.

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