Real Estate Math
A buyer's mortgage payment is $1,850 per month, including principal, interest, taxes, and insurance (PITI). The lender requires a housing expense ratio (front-end ratio) of no more than 28%. What minimum gross monthly income does the buyer need?
A$5,185
B$6,607✓ Correct
C$7,400
D$9,250
Explanation
Maximum PITI = Gross Income × 28%. Minimum Gross Income = $1,850 ÷ 0.28 = $6,607 (rounded). To solve this, multiply the relevant values: $1,850 at 28%.. The correct answer is $6,607.. This is a common calculation on the Illinois real estate exam.
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