A borrower has gross monthly income of $6,000. The proposed housing payment plus all counted monthly debts total $2,100. What is the back-end DTI?
Correct Answer
D) 35%
Why this is correct: The back-end debt-to-income (DTI) ratio is a key underwriting metric calculated by dividing the borrower's total monthly debt obligations by their gross monthly income. Here, total monthly obligations are given as $2,100, and gross monthly income is $6,000. The calculation is $2,100 ÷ $6,000 = 0.35, which equals 35%. Why the other choices are wrong: - "28%" is incorrect because $2,100 ÷ $6,000 does not equal 0.28. - "30%" is incorrect because $2,100 ÷ $6,000 equals 0.35, not 0.30. - "32%" is incorrect because $2,100 ÷ $6,000 equals 0.35, not 0.32. Exam tip: For DTI questions, identify the correct total monthly debt (the back-end includes housing payment plus all other counted debts) and divide by gross monthly income. Multiply the decimal result by 100 to get the percentage.
Why This Is the Correct Answer
Why this is correct: The back-end debt-to-income (DTI) ratio is a key underwriting metric calculated by dividing the borrower's total monthly debt obligations by their gross monthly income. Here, total monthly obligations are given as $2,100, and gross monthly income is $6,000. The calculation is $2,100 ÷ $6,000 = 0.35, which equals 35%. Why the other choices are wrong: - "28%" is incorrect because $2,100 ÷ $6,000 does not equal 0.28. - "30%" is incorrect because $2,100 ÷ $6,000 equals 0.35, not 0.30. - "32%" is incorrect because $2,100 ÷ $6,000 equals 0.35, not 0.32. Exam tip: For DTI questions, identify the correct total monthly debt (the back-end includes housing payment plus all other counted debts) and divide by gross monthly income. Multiply the decimal result by 100 to get the percentage.
More Mortgage Knowledge Questions
A self-employed borrower's eligible business income, after all required underwriting adjustments, is $72,000 for the first year and $84,000 for the second year. Using a simple 24-month average, what monthly income is used?
In a file escalation meeting, a processor sees facts tied to Discount Points Break Even Analysis. What should the file reflect?
During a mortgage operations checklist, a sponsorship reviewer identifies an issue involving points and fee calculations. Which response is most compliant?
A team member asks about DTI Calculation Guidelines in a consumer complaint triage while trying to explain the required action to the team. Which response should the file reviewer use?
A mortgage file is paused during a lock-desk handoff because of VA Loan Entitlement Calculation. Which answer should identify which rule controls the file?
A mortgage team asks a branch supervisor about DTI Calculation Rules during a company policy update. Which answer should guide the file?
A mortgage team asks a sponsorship reviewer about DTI Calculation Components during a file review. Which answer should guide the file?
Before the loan advances, a state compliance officer must resolve a LTV Ratio Calculation issue in a mortgage operations checklist. What should happen?
Before the loan advances, a branch supervisor must resolve a ARM features and caps issue in a ARM features and caps. What should happen?
In a closing-readiness check, a processor sees facts tied to LTV Calculation. What should the file reflect?
People Also Study
Federal Mortgage-Related Laws
24% of exam
Mortgage Loan Origination Activities
27% of exam
Ethics, Fraud & Consumer Protection
18% of exam
Uniform State Test Content
11% of exam
Related Study Resources
Previous Question
Before the team acts on a branch training session, a risk reviewer must address VA Loan Entitlement Limits. Which response is most defensible?
Next Question
A team member asks about FHA Down Payment Requirements in an investor-delivery review while trying to select the answer that fits the governing requirement. Which response should a quality-control reviewer use?