Final answer:
To determine the maximum house payment including PITI for a conforming loan, multiply the gross monthly income by 0.43, subtract the recurring monthly debt from that, and the result is the maximum house payment.
Step-by-step explanation:
To determine the maximum house payment including PITI that the applicant qualifies for, we need to consider their recurring monthly debt, gross monthly income, and the requirements for a conforming loan.
A conforming loan typically requires a debt-to-income ratio (DTI) of no more than 43%. In this case, the recurring monthly debt is $425 and the gross monthly income is $3,850.
To calculate the maximum house payment:
Step 1: Multiply the gross monthly income by 0.43 (43%).
Step 2: Subtract the recurring monthly debt from the result of Step 1.
Therefore, the maximum house payment for which the applicant qualifies is $1,358.