Final answer:
Based on the client's total gross monthly income of $6,400 and following FHA back-end ratio guidelines with a limit of 43%, the client can afford a maximum PITIA payment of $2,752. However, considering the client's existing debt and household expenses, the realistic maximum PITIA payment is $1,106.
Step-by-step explanation:
To determine the maximum payment for principal, interest, taxes, insurance, and association fees (PITIA) that an FHA client can afford, we can apply the FHA's back-end ratio guidelines. The Federal Housing Administration (FHA) typically uses a ratio of 43% of the borrower's gross monthly income as a guideline for the maximum amount of housing expense they can afford. This includes not just the mortgage loan itself, but also the associated costs like taxes and insurance.
Based on the information provided, the client's total gross monthly income is $6,400. To calculate the maximum PITIA the client can afford, we'll multiply this by 43%, which is the percentage recommended by FHA guidelines. So, $6,400 x 0.43 equals $2,752. This is the monthly maximum PITIA.
Since the client has existing debt expenses of $615 and household expenses of $4,679, we must ensure that the PITIA does not cause the total expenditure to exceed the client's income. Subtracting the client's monthly expenses from their gross monthly income ($6,400 - $615 - $4,679) gives us $1,106 as the remaining amount for PITIA. However, based on the 43% rule, they could technically afford $2,752, but in reality, they can only allocate $1,106 without exceeding their income.
Therefore, the maximum PITIA payment this client can afford, rounded to the nearest dollar, based on the information given, would be $1,106.