A condo payment is quoted as $1,910 principal and interest, $380 taxes, $95 insurance, $240 association dues and $110 mortgage insurance. What is the total monthly housing expense when all listed components are included?
Correct Answer
C) All 5 figures enter the housing ratio, totalling $2,735 a month
C. The listed monthly housing expenses total $2,735. Add $1,910 + $380 + $95 + $240 + $110 = $2,735. Association dues and applicable mortgage insurance are part of housing expense even when not collected with the principal-and-interest payment. Scope and exceptions: This is the sum of the listed monthly amounts, not a determination of loan approval. Actual qualifying housing expense may include additional applicable items and a program-specific qualifying payment. Do not confuse an annual insurance quote with a monthly amount. Source: Monthly Housing Expense — https://selling-guide.fanniemae.com/sel/b3-6-03/monthly-housing-expense-subject-property
Why This Is the Correct Answer
C. The listed monthly housing expenses total $2,735. Add $1,910 + $380 + $95 + $240 + $110 = $2,735. Association dues and applicable mortgage insurance are part of housing expense even when not collected with the principal-and-interest payment. Scope and exceptions: This is the sum of the listed monthly amounts, not a determination of loan approval. Actual qualifying housing expense may include additional applicable items and a program-specific qualifying payment. Do not confuse an annual insurance quote with a monthly amount.
Why the Other Options Are Wrong
Option A: All but the $110 mortgage insurance, for a total of $2,625 a month
The $2,625 total omits the stated $110 mortgage insurance.
Option B: Only the $1,910 principal and interest enters the housing ratio
Principal and interest alone omit $825 in listed recurring expenses.
Option D: All but the $240 association dues, for a total of $2,495 a month
The $2,495 total omits $240 in association dues.
Exam Tip
Use the complete monthly housing obligation, not only the note payment.
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