Question

Suppose that a borrower wants to qualify for a conforming loan (total debt service ratio of 36%) with a monthly PITI payment of $600. She has $300 in other long-term obligations. What is the minimum gross monthly income she must make in order to qualify for this loan?

Answer 1

$2500

Step-by-step explanation:

The maximum amount of payments allowed for payables per month is 36% of the gross monthly income. And here, the total payments that is made during the month is $600 and $300 for long term borrowings and PITI which is a long term commitment of making monthly payments.

So the total payments for settlement of long term obligations is $900 which is 36%.

So

Gross monthly Income = $900 / 36% = $2500.