A West Virginia borrower's debt-to-income (DTI) ratio is calculated by:
Correct Answer
A) Dividing monthly debt payments by gross monthly income
DTI = Total monthly debt payments ÷ Gross monthly income. Lenders use this ratio to assess borrowing capacity. Most conventional loans require a DTI below 43-50%. The front-end ratio (housing only) is typically limited to 28-31%.
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Related Topics & Key Terms
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Related Concepts
In the context of foreclosure, a deed transfers ownership of the foreclosed property to the new owner, typically the buyer at a foreclosure sale.
Discount points are upfront fees paid to a lender at closing to reduce (buy down) the interest rate on a mortgage loan. One point equals 1% of the loan amount and typically reduces the rate by approximately 0.25%.
An FHA loan is a mortgage insured by the Federal Housing Administration that allows lower down payments and credit scores than conventional loans. It is designed to help first-time homebuyers and borrowers with limited resources.
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