Finance
The 'front-end' debt-to-income ratio (housing expense ratio) limits which monthly expenses?
AAll monthly debts
BOnly the principal, interest, taxes, and insurance (PITI) compared to gross income✓ Correct
COnly the principal and interest
DAll consumer debt only
Explanation
The front-end ratio compares only housing costs (PITI — principal, interest, taxes, and insurance) to gross monthly income. Conventional guidelines often target this at 28% or below.
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