Question

The client's gross monthly income is $4167 and the monthly debts are $435. With a monthly mortgage payment of $950, which is the client's debt-to-income ratio (round to the nearest whole percent)?

Answer 1

The client's debt-to-income ratio is 33% when calculated by adding the monthly debts to the mortgage payment, dividing by the gross monthly income, and then multiplying by 100 to get a percentage.

Step-by-step explanation:

To calculate the client's debt-to-income ratio, we need to add the monthly debts to the monthly mortgage payment, and then divide by the gross monthly income. The formula is:

Debt-to-Income Ratio = (Monthly Debts + Monthly Mortgage Payment) / Gross Monthly Income

So for this client:

Debt-to-Income Ratio = ($435 + $950) / $4167

When we calculate this, we get:

Debt-to-Income Ratio = $1385 / $4167 = 0.3323

When we convert this to a percentage and round to the nearest whole percent, we get:

Debt-to-Income Ratio = 33%