Determine the maximum monthly payment for a house (to the nearest dollar), if gross monthly income is $1,200 and current monthly payments on bills total $230.
A) $320
B) $349
C) $432
D) $970
E) $3,600

Question

Quizplus · Accepted Answer

To determine the maximum monthly payment for a house, we need to use the debt-to-income ratio (DTI), which is the total debt payments divided by gross monthly income. In this case, the DTI is 230/1200 = 0.192. Lenders usually prefer a DTI of 0.36 or less, but for FHA loans, the maximum DTI is 0.43. So, the maximum monthly payment for a house is (0.43 x 1200) - 230 = $349 (rounded to the nearest dollar). Choice B is the best answer.

Determine the Maximum Monthly Payment for a House (To the Nearest