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 qualifying ratio limits the borrower's monthly housing expense to 28% of gross monthly income. $6,000 × 0.28 = $1,680. This is the maximum allowable monthly housing expense (PITI) the lender will approve.
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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?
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