A buyer's monthly gross income is $7,500. Using a 28% front-end (housing) ratio, what is the maximum PITI payment they can afford?
Why $2,100 Is Correct
Answer B: $2,100
Exam Tip: Real Estate Math
Math questions are formula-based. Memorize the key formulas: commission splits, proration, cap rate (NOI ÷ Value), GRM (Price ÷ Gross Rent), and LTV (Loan ÷ Value). Practice converting between annual and monthly figures.
People Also Study
Related Arizona Questions
- A buyer can afford a maximum monthly payment of $2,400. If taxes are $200/month and insurance is $125/month, what is the maximum PITI payment, and how much is available for principal and interest (P&I)?Real Estate Math
- A lender requires a maximum 43% debt-to-income (DTI) ratio. A borrower has monthly debt payments of $750 and gross monthly income of $5,800. Can they add a mortgage payment of $1,200?Real Estate Math
- An Arizona rental property is purchased for $280,000. Annual gross rent is $26,400. What is the gross rent multiplier (using annual income)?Real Estate Math
- An Arizona property produces a Net Operating Income (NOI) of $120,000 per year. Using a capitalization rate of 6%, what is the estimated value?Property Valuation
- Which type of loan is insured by the Federal Housing Administration (FHA) and is popular with Arizona first-time buyers due to its low down payment requirement?Finance
- An Arizona income property generates gross rents of $90,000 per year. Vacancy and credit losses are 5%, and operating expenses are $35,000. What is the Net Operating Income (NOI)?Property Valuation
- An appraiser values an Arizona commercial property using a cap rate of 7% and an NOI of $63,000. What is the indicated value?Property Valuation
- A property in Arizona has a gross rent multiplier (GRM) of 120 and rents for $1,800 per month. What is the estimated value using the GRM method?Property Valuation
Key Terms to Know
A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Study This Topic
Practice More Arizona Real Estate Questions
1,400+ questions covering all exam topics. Start free — no signup required.
Take the Free Arizona Quiz →