Question

3. The Miquels had the following housing expenses for September: mortgage

payment of $396.80, $34.15 for insurance premium, $139.40 for real estate taxes,
$44.75 for home improvements, $51.20 for electricity, $29.75 for telephone service,
$63.84 for natural gas, and $18.50 for water. Their monthly gross pay is $2,478.60.
a. What is their monthly housing cost?
b. Based on their monthly gross pay, what is the recommended
FHA maximum for their housing expenses?
c. Is their monthly housing cost within the FHA recommendation?

Answer 1

C

Explanation:

a. The Miquels’ monthly housing cost is the sum of their expenses: $396.80 + $34.15 + $139.40 + $44.75 + $51.20 + $29.75 + $63.84 + $18.50 = $778.39.

b. The Federal Housing Administration (FHA) recommends that housing expenses should not exceed 31% of a household’s monthly gross income. For the Miquels, this would be 0.31 * $2,478.60 = $768.37.

c. No, their monthly housing cost of $778.39 is not within the FHA recommendation of $768.37.