Jane's monthly gross income is $4000 and her debt payments are $400 per month.Given GDS of 30 percent and TDS of 40 percent,she will be able to qualify for mortgage-related debt payments of $1200 per month.

Question

Quizplus · Accepted Answer

To calculate the Gross Debt Service (GDS), we need to divide the total monthly mortgage-related payments (including principal, interest, property taxes, and heating expenses) by the gross monthly income and multiply by 100:

GDS = (Total monthly mortgage payments / Gross monthly income) x 100

Assuming Jane's GDS is 30%, we can figure out the maximum mortgage-related debt payments she can afford:

GDS = (Total monthly mortgage payments / Gross monthly income) x 100
30 = (Total monthly mortgage payments / $4,000) x 100
Total monthly mortgage payments = $1,200

This means that Jane will be able to qualify for mortgage-related debt payments of $1,200 per month, which is less than her current debt payments of $400 per month, so she should be able to qualify for a mortgage if she meets other criteria (e.g., credit score, down payment, etc.). Therefore, the answer is A.

Jane's Monthly Gross Income Is $4000 and Her Debt Payments