Finance
A buyer's annual gross income is $90,000. Following a 28% front-end ratio guideline, what is the maximum monthly housing payment a conventional lender would typically allow?
A$1,500
B$2,100✓ Correct
C$2,500
D$3,000
Explanation
Monthly gross income: $90,000 ÷ 12 = $7,500. Maximum housing payment at 28%: $7,500 × 0.28 = $2,100. The front-end ratio (also called the housing ratio) limits the monthly housing payment (PITI) to a percentage of gross monthly income.
Related Rhode Island Finance Questions
- What does 'PITI' stand for in mortgage lending?
- Under TRID (TILA-RESPA Integrated Disclosure), how many business days before closing must a lender provide the Closing Disclosure to the borrower?
- Rhode Island Housing and Mortgage Finance Corporation (RIHousing) primarily serves to:
- The Equal Credit Opportunity Act (ECOA) prohibits lenders from discriminating against credit applicants based on:
- The Community Reinvestment Act (CRA) requires:
- What is 'prepayment privilege' in a Rhode Island mortgage?
- USDA Rural Development loans are designed to assist buyers in:
- In Rhode Island, which type of mortgage foreclosure is most common, where the lender must obtain a court order to foreclose?
Practice More Rhode Island Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Rhode Island Quiz →