Lucerne earns a gross income of $5,500 per month and applies for a mortgage with a monthly PITI of $1,244. Lucerne has other financial obligations totaling $829 per month. (Use the ratio guidelines from your text) What type of mortgage, if any, would Lucerne qualify for?

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Quizplus · Accepted Answer

Lucerne's total debt-to-income ratio is ($1,244 + $829) / $5,500 = 37.6%. FHA loans typically allow a higher debt-to-income ratio, often up to 43%, so Lucerne would qualify for an FHA loan. Conventional loans usually require a lower ratio, often around 36%, which Lucerne exceeds.

Lucerne Earns a Gross Income of $5,500 Per Month and Applies