Real Estate Math
A Hawaii buyer's gross monthly income is $12,000. Using a 43% DTI limit for total debt (PITI + other debts), and the buyer has $800/month in other debts, what maximum PITI payment is allowed?
AA. $4,360✓ Correct
BB. $5,160
CC. $4,560
DD. $5,960
Explanation
Maximum total debt = $12,000 × 43% = $5,160. Subtract other debts: $5,160 - $800 = $4,360 maximum PITI.
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Key Terms to Know
Debt-to-Income Ratio (DTI)
A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
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.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Math Concepts
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