Tamar is applying for a mortgage. She has a monthly gross income of $4,500. The home she would like to buy has monthly payments for a mortgage of $750, a property tax of $200, and a hazard insurance premium of $125. What is her front-end mortgage qualification ratio?

Question

Quizplus · Accepted Answer

The front-end mortgage qualification ratio is calculated by dividing the total monthly housing costs by the monthly gross income. In Tamar's case, the total monthly housing costs are $750 (mortgage) + $200 (property tax) + $125 (hazard insurance) = $1,075. Therefore, the ratio is $1,075 / $4,500 = 0.2389, which is approximately 24%.

Tamar Is Applying for a Mortgage