Investor A decided to use a hard money (short-term) loan to purchase a condo that costs $80,000 with a 60% down payment loan, at 6.00% annual fixed rate interest for 30 months.  The payments will be made once per month. What is the monthly payment for this mortgage? Round to the nearest cent.

To calculate the monthly payment for this mortgage, we'll use the formula for a fixed-rate loan, which is derived from the amortization formula:

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

Where:
- $ M $ is the monthly payment
- $ P $ is the loan amount (principal)
- $ r $ is the monthly interest rate (annual interest rate divided by 12)
- $ n $ is the total number of payments (loan term in months)

### Step 1: Determine the loan amount
Since Investor A is using a hard money loan with a 60% down payment, the loan amount is 40% of the purchase price.

\[
P = 40\% \times 80,000 = 0.40 \times 80,000 = 32,000
\]

### Step 2: Monthly interest rate
The annual interest rate is 6.00%, so the monthly interest rate is:

\[
r = \frac{6.00\%}{12} = \frac{0.06}{12} = 0.005
\]

### Step 3: Total number of payments
The loan is for 30 months, so:

\[
n = 30
\]

### Step 4: Plug values into the formula
Now, substitute the values into the amortization formula:

\[
M = \frac{32,000 \cdot 0.005 \cdot (1 + 0.005)^{30}}{(1 + 0.005)^{30} - 1}
\]

Let's calculate this now.The monthly payment for the mortgage is **$1,151.33**, rounded to the nearest cent.

Would you like more details or have any questions? Here are some related questions to consider:

1. How would the payment change if the loan term were extended to 5 years instead of 30 months?
2. What would be the total interest paid over the life of the loan?
3. How does a higher down payment affect the monthly payment?
4. What impact does a different interest rate have on the monthly payment?
5. How would switching from monthly to biweekly payments affect the mortgage?

**Tip**: A larger down payment decreases the loan amount, which in turn reduces monthly payments and the total interest paid over the life of the loan.

Investor A decided to use a hard money (short-term) loan to purchase a condo that costs $80,000 with a 60% down payment loan, at 6.00% annual fixed rate interest for 30 months. The payments will be made once per month. What is the monthly payment for this mortgage? Round to the nearest cent.

Learn how to calculate the monthly mortgage payment for a condo worth $80,000, with a 60% down payment, a 6% annual interest rate, and a 30-month loan term. This step-by-step solution walks through key concepts like loan amortization, interest rate calculations, and fixed-rate mortgages. Suitable for high school and college students.

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