Finance
The 'debt-to-income ratio' (DTI) that most conventional lenders use as a maximum for qualified mortgages is approximately:
A28% housing expense ratio, maximum 36% total DTI
B43% total DTI (though some loans can go higher with compensating factors)✓ Correct
C50% housing expense ratio with no limit on total debt
D25% total DTI for all borrowers
Explanation
For Qualified Mortgages (QM), the CFPB standard generally caps total DTI at 43%. Fannie Mae and Freddie Mac may allow higher DTIs with strong compensating factors (large down payment, excellent credit, substantial reserves).
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