Real Estate Math
A Montana home's monthly mortgage payment is $1,750 (PITI). The borrower's gross annual income is $84,000. Does the housing debt ratio meet the conventional 28% guideline?
ANo, the ratio is 25%
BYes, the ratio is exactly 25%✓ Correct
CNo, the ratio is 31.25%
DYes, the ratio is 28%
Explanation
Gross monthly income = $84,000 ÷ 12 = $7,000. Housing ratio = $1,750 ÷ $7,000 = 25%. At 25%, the ratio is below the 28% guideline, so yes it meets the conventional standard.
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