A borrower has a gross monthly income of $8,000. Their proposed mortgage payment (PITI) is $2,400 per month. What is their front-end debt-to-income ratio?
Correct Answer
B) 30%
Front-end DTI is calculated by dividing the proposed housing payment (PITI) by gross monthly income. $2,400 ÷ $8,000 = 0.30 or 30%. The front-end ratio only considers housing-related debt payments.
Why This Is the Correct Answer
Front-end DTI is calculated by dividing the proposed housing payment (PITI) by gross monthly income. $2,400 ÷ $8,000 = 0.30 or 30%. The front-end ratio only considers housing-related debt payments.
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