A borrower has a gross monthly income of $8,000 and monthly debt payments of $2,400. What is their debt-to-income ratio?
Correct Answer
B) 30%
Debt-to-income ratio is calculated by dividing total monthly debt payments by gross monthly income. $2,400 ÷ $8,000 = 0.30 or 30%. This ratio is a key underwriting factor used to assess a borrower's ability to manage monthly payments.
Why This Is the Correct Answer
Debt-to-income ratio is calculated by dividing total monthly debt payments by gross monthly income. $2,400 ÷ $8,000 = 0.30 or 30%. This ratio is a key underwriting factor used to assess a borrower's ability to manage monthly payments.
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