Using a back-end ratio of 37 percent,a person with a $360 auto loan would need a monthly gross income of approximately ____ to buy a home with total monthly payments of $1,420.

Question

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To find the required monthly gross income, add the auto loan payment ($360) to the total monthly home payment ($1,420) to get $1,780. Then, divide $1,780 by 0.37 (the back-end ratio) to find the income needed, which is approximately $4,811.

Using a Back-End Ratio of 37 Percent,a Person with a $360