Final answer:
Bryan and Julie can afford a monthly mortgage payment of approximately $1,341.67, after accounting for their fixed monthly expenses and using the conventional 28% housing expense ratio as a benchmark.
Step-by-step explanation:
To calculate the monthly mortgage payment Bryan and Julie can afford, we first need to estimate their monthly expenses and understand their total expense ratio. Their combined gross income is $65,000 annually, which is approximately $5,416.67 per month (65,000 / 12).
From this income, monthly expenses need to be deducted. These expenses are:
- Property taxes: $1,200 yearly / 12 months = $100 per month
- Insurance: $900 yearly / 12 months = $75 per month
- Car payment: $200 per month
- Student loans: $700 per month
Adding these expenses, Bryan and Julie have a total of $1,075 in fixed expenses each month that do not include the mortgage payment.
Therefore, their available monthly income for the mortgage would be their gross income minus these expenses: $5,416.67 - $1,075 = $4,341.67.
The total expense ratio is not specifically provided in the question, but as a general rule of thumb, lenders recommend that the total monthly housing costs should not exceed 28% of the gross monthly income. If we apply this customary ratio, we can estimate Bryan and Julie's affordable housing costs.
28% of $5,416.67 is $1,516.67. After subtracting the property taxes and insurance ($100 + $75 = $175), we can estimate that Bryan and Julie can afford a monthly mortgage payment of around $1,516.67 - $175 = $1,341.67.