Real Estate Math
A Minnesota buyer has a gross monthly income of $7,500. Using a 28% front-end ratio, what is the maximum monthly housing payment?
A$1,800
B$2,100✓ Correct
C$2,400
D$1,500
Explanation
Maximum housing payment = Gross Monthly Income x Front-End Ratio = $7,500 x 0.28 = $2,100. The front-end ratio compares housing costs (PITI) to gross income. Most conventional lenders use a 28% front-end ratio as a guideline, though some allow higher ratios with compensating factors.
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