Finance
A Florida lender uses the 'debt-to-income' (DTI) ratio to evaluate a mortgage applicant. The back-end DTI ratio includes:
AOnly the proposed housing payment
BAll monthly debt obligations (housing + car payments + credit cards + student loans) divided by gross monthly income✓ Correct
CThe loan amount divided by the property value
DThe applicant's savings divided by the loan amount
Explanation
The back-end (total) DTI ratio is calculated by dividing all monthly debt obligations (including the proposed housing payment plus all other recurring debts) by the borrower's gross monthly income. Conventional loans typically require a back-end DTI ≤ 43-45%.
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