What is person debt payments-to-income ratio

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Reference no: EM131811269

1. Debt payments-to-income ratios will likely be considered as you apply for a mortgage. The Focus on Personal Finance text suggests keeping this ratio below 20%. A mortgage lender will have their own ratio for all debt payments, including mortgage-to-income ratio, before they will consider approval. Using this information, answer the questions and show your calculations in the table below:

  • Net monthly income: $4,000
  • Expected full mortgage payment (PITI): $1,000
  • Student loan payment: $250
  • Car payment: $300

Enter your calculation and response in this column.

What is this person's debt payments-to-income ratio?

What is this person's debt payments-to-income ratio when the full mortgage payment is included?

If the mortgage lender required total payment to income ratio below 40%, would this person meet that standard?

If the mortgage lender required total payment to income ratio below 45%, what is the maximum monthly payments this person could have to meet the standard?

Reference no: EM131811269

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