If a buyer puts 20% down on a home and borrows $200,000, what is the total purchase price of the home?

To determine the total purchase price of the home when a buyer puts down 20% and borrows $200,000, you can use the relationship between the down payment percentage and the loan amount. A down payment of 20% means that the loan represents 80% of the home’s price.

If the borrowed amount is $200,000, this amount constitutes 80% of the total purchase price. To find the total purchase price, you can set up the equation:

Let "P" be the total purchase price. Therefore, 80% of "P" equals $200,000:

0.80 * P = $200,000

To find "P," divide both sides of the equation by 0.80:

P = $200,000 / 0.80 P = $250,000

Thus, the total purchase price of the home is $250,000. This calculation aligns with the definition of percentage relationships, establishing why choosing $250,000 as the total purchase price is correct.