Real Estate Math
A buyer wants to borrow the maximum amount with a 28% front-end DTI ratio. Their gross monthly income is $7,500. What is the maximum monthly housing payment allowed?
A$2,100✓ Correct
B$1,750
C$2,500
D$3,000
Explanation
Maximum housing payment = $7,500 × 0.28 = $2,100.
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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.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Math Concepts
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