A lender uses a 28% front-end qualifying ratio. If a borrower earns $6,000 per month in gross income, what is the maximum allowable monthly housing expense?
Correct Answer
B) $1,680
The front-end ratio limits the borrower's monthly housing expense (principal, interest, taxes, and insurance) to a percentage of gross monthly income. $6,000 × 0.28 = $1,680 maximum allowable monthly housing expense.
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