A borrower has a monthly gross income of $8,000. Their proposed mortgage payment is $2,200 (including PITI), and they have additional monthly debt obligations of $600. If the lender's maximum front-end DTI is 28% and back-end DTI is 36%, what is the borrower's situation?
Correct Answer
B) Exceeds front-end ratio but meets back-end ratio
Front-end DTI = $2,200 ÷ $8,000 = 27.5% (meets 28% limit). Back-end DTI = ($2,200 + $600) ÷ $8,000 = 35% (meets 36% limit). The borrower actually qualifies for both ratios, making this a tricky calculation question where the borrower meets both requirements despite the high payment amount.
Why This Is the Correct Answer
Front-end DTI = $2,200 ÷ $8,000 = 27.5% (meets 28% limit). Back-end DTI = ($2,200 + $600) ÷ $8,000 = 35% (meets 36% limit). The borrower actually qualifies for both ratios, making this a tricky calculation question where the borrower meets both requirements despite the high payment amount.
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