Main Answer:
The couple will be allowed a total of $1,680 for all housing expenses plus other debt.
Step-by-step explanation:
In determining the loan eligibility based on Fannie Mae ratios of 28/36, lenders consider the front-end ratio, which is the percentage of income allocated to housing expenses, and the back-end ratio, which includes all debt payments. The front-end ratio is calculated by multiplying the monthly income by 28%, resulting in $1,680 (28% of $6,000). This amount represents the maximum allowable for housing expenses, including mortgage payments, property taxes, and homeowners' insurance.
The back-end ratio is calculated by multiplying the monthly income by 36%, which accounts for all debt payments. Given the couple's combined monthly income of $6,000, the total allowable for all debt, including housing expenses, is $2,160 (36% of $6,000). To find the maximum amount allowed for other debt besides housing expenses, subtract the front-end ratio from the back-end ratio: $2,160 - $1,680 = $480. Therefore, the couple can allocate up to $480 per month for other long-term debts.
In summary, the couple will be allowed a total of $1,680 for all housing expenses plus other debt, as determined by the standard Fannie Mae ratios. This ensures a balanced approach to assessing their ability to manage housing costs while meeting other financial obligations.