A borrower's monthly debt payments total $2,800, and their verified monthly income is $7,500. They apply for a mortgage with a monthly payment of $2,450. What is their DTI ratio for QM purposes?
Correct Answer
C) 70.0%
Under 12 CFR 1026.43(c)(2)(vi), DTI is calculated as monthly debt payments divided by monthly income. The total debt includes existing debt ($2,800) plus the new mortgage payment ($2,450) = $5,250. DTI = $5,250 ÷ $7,500 = 70%, which exceeds the 43% QM threshold.
Why This Is the Correct Answer
Under 12 CFR 1026.43(c)(2)(vi), DTI is calculated as monthly debt payments divided by monthly income. The total debt includes existing debt ($2,800) plus the new mortgage payment ($2,450) = $5,250. DTI = $5,250 ÷ $7,500 = 70%, which exceeds the 43% QM threshold.
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