Finance
A Texas homebuyer's debt-to-income (DTI) ratio is calculated by dividing:
AThe home price by the household income
BTotal monthly debt obligations (including the proposed housing payment) by gross monthly income✓ Correct
CThe down payment by the loan amount
DAnnual income by the purchase price
Explanation
DTI ratio = Total Monthly Debt Payments / Gross Monthly Income. Lenders calculate both front-end DTI (housing costs only / gross income) and back-end DTI (all monthly debt payments / gross income). Conventional loans typically require a maximum back-end DTI of 43-45%, though some loan programs allow higher ratios.
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