Real Estate Math
A Virginia buyer's monthly gross income is $9,000. Their lender has a maximum front-end ratio of 28%. What is the maximum monthly PITI allowed?
A$2,250
B$2,520✓ Correct
C$2,700
D$3,000
Explanation
Maximum PITI = $9,000 × 28% = $2,520. To solve this, multiply the relevant values: $9,000 at 28%..
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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.
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.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
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