An Ohio borrower wants to calculate their debt-to-income (DTI) ratio for mortgage qualification. The borrower has a gross monthly income of $8,000, a proposed PITI of $2,400, a car payment of $400, and student loans of $200. What is the borrower's back-end (total) DTI ratio?
Correct Answer
A) 37.5%
Back-end DTI = (PITI + all monthly debt) ÷ gross monthly income = ($2,400 + $400 + $200) ÷ $8,000 = $3,000 ÷ $8,000 = 0.375 = 37.5%.
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Related Topics & Key Terms
Key Terms:
Related Concepts
TILA is a federal law that requires lenders to disclose the true cost of credit to borrowers, including the annual percentage rate (APR), total finance charges, and loan terms. It is implemented by Regulation Z.
A trustee sale is a type of foreclosure where a trustee, appointed under a deed of trust, sells the property at auction to satisfy the debt.
Usury is the practice of charging an interest rate that exceeds the maximum rate permitted by state law. Usury laws protect borrowers from excessive interest charges on loans.
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An Ohio buyer obtains a 30-year fixed-rate mortgage. The lender establishes an escrow account for property taxes and homeowner's insurance. Under RESPA, the lender may maintain a cushion in the escrow account of no more than:
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Under Ohio and federal lending regulations, all of the following are included in the back-end (total) DTI ratio calculation EXCEPT: