Dti maximum monthly mortgage loan payment

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Reference no: EM13692895

Tom walks into the Really Big Apple Savings Bank to see you and to get pre-approved on a mortgage loan. (A borrower can be pre-approved for a loan based off of credit history and income and assets. The loan would be approved subject to an acceptable appraisal). Tom is ready to go shopping for an apartment and knows that if he tells the broker that he is already pre-approved by the bank he stands a much better chance of negotiating the price of the apartment.

Tom makes $150,000/year and has $400 in monthly credit card expenses, $250/month in student loan payments and a $200/month auto lease payment.

Tom is looking in Williamsburg and based on your data you know that annual property taxes and property insurance total $5,400 annually in that area.

He is looking for a 30 year, fixed rate mortgage and subject to approval you will be able to offer him an 85% LTV mortgage at 5.65% with zero points of origination expenses.


4) What is Tom's Front-end DTI maximum monthly mortgage loan payment using a 28% DTI ratio?

5) What is Tom's Back-end DTI maximum monthly mortgage loan payment using a 36% DTI ratio?

6) What is the maximum monthly mortgage payment you will allow Tom to make?


7) If Tom takes out the loan exactly at that maximum payment amount how large a loan can you make to him?

8) If he takes out that size loan (in Q#7) how much can he afford to pay for the apartment?


9) If the appraisal you obtain only shows the value of the apartment to be $600,000 how much will the bank lend Tom to buy it?

10) If Tom's FICO score comes back at <680 you will need to charge him 50bps more on his lending rate. If that happens what will be the most you will lend him?

Reference no: EM13692895

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