Final answer:
The lender qualifies the Hackworths for a home loan using two key ratios: the debt-to-income ratio, which assesses their ability to manage payments relative to their income, and the loan-to-value ratio, which compares the loan amount to the property's value.
Step-by-step explanation:
When the Hackworths apply for a conventional home loan, the lender qualifies them based on the debt-to-income ratio and the loan-to-value ratio. The debt-to-income ratio is a personal finance measure that compares the amount of debt you have to your overall income. Lenders use this ratio to assess a loan applicant's ability to manage monthly payments and repay the money borrowed. The loan-to-value ratio is an assessment of lending risk that financial institutions and other lenders examine before approving a mortgage, which compares the amount of the loan to the market value of the property.