Question

Hope is applying for an FHA loan to purchase a $360,000 condominium. Her proposed monthly mortgage payment is $1,850 and she has a $500 car payment and a $350 student loan payment. Using the fixed payment to income ratio, what would be her minimum monthly income in order to afford this loan?

Answer 1

Answer: $6289.07

Step-by-step explanation:

Monthly mortgage = $1,850

Car payment = $500

Student loan = $350

Note : 43% is the maximum debt to income ratio under FHA

Therefore calculating Hope's total monthly debt ;

(Monthly mortgage + car payment + student loan)

$(1850 + 500 + 300) = $2700.

Therefore Hope's minimum monthly income in other to afford the loan can be calculated by dividing her total monthly debt by the maximum debt to income ratio under FHA

$2700 ÷ 0.43 = $6,279.069

=$6279.07