Finance
The debt-to-income (DTI) ratio that most conventional loan programs use as a guideline for qualifying borrowers is generally no more than:
A28%
B36%
C43%✓ Correct
D50%
Explanation
Most conventional loan programs use a 43% total debt-to-income (DTI) ratio as the maximum qualifying guideline, though some programs allow up to 50% with compensating factors. DTI includes all monthly debt obligations divided by gross monthly income.
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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.
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.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Math Concepts
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