Using a front-end ratio of 28 percent,one would need an annual gross income of at least ____ to buy a home with total monthly payments of $1,245.

Question

Quizplus · Accepted Answer

To calculate the minimum annual gross income needed to afford a home with a front-end ratio of 28%, we divide the total monthly payment by 0.28 (28% as a decimal):
$1,245 ÷ 0.28 = $4,446.43 (monthly gross income)
To find the minimum annual gross income, we multiply this number by 12:
$4,446.43 x 12 = $53,357.16
Therefore, the answer is choice C, $62,250 is higher than the required minimum income.

Using a Front-End Ratio of 28 Percent,one Would Need an Annual