Jordan's gross monthly salary is $6,000.If according to the rule of 36 she can afford a maximum PITI of $1,550,what must her consumer credit debt be?
A)$130
B)$550
C)$610
D)$250

Question

Quizplus · Accepted Answer

To find out Jordan's maximum allowable debt payments, we can use the Rule of 36. The percentage of her gross monthly income that can be used for debt payments (including mortgage or rent, utilities, and other debt) is 36%, or:

0.36 x $6,000 = $2,160

From this amount, we subtract her estimated monthly housing payment (PITI, or principal, interest, taxes, and insurance):

$2,160 - $1,550 = $610

So Jordan can afford a total of $610 per month in consumer credit debt payments.

Therefore, the answer is C) $610.

Jordan's Gross Monthly Salary Is $6,000