If a borrower has a stable monthly income of $3,200, what would be the maximum housing expense?

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Multiple Choice

If a borrower has a stable monthly income of $3,200, what would be the maximum housing expense?

Explanation:
This question tests understanding of the front-end housing expense ratio used in loan qualification. To find the maximum housing payment, multiply the borrower’s gross monthly income by the allowed front-end ratio. With a 31% limit, 3,200 × 0.31 equals 992. This 992 represents the maximum amount available for housing expenses (PITI). The other values correspond to different ratios (32% would be 1,024; 28% would be 896; 33% would be 1,056), which would apply only if a different limit were in use.

This question tests understanding of the front-end housing expense ratio used in loan qualification. To find the maximum housing payment, multiply the borrower’s gross monthly income by the allowed front-end ratio. With a 31% limit, 3,200 × 0.31 equals 992. This 992 represents the maximum amount available for housing expenses (PITI). The other values correspond to different ratios (32% would be 1,024; 28% would be 896; 33% would be 1,056), which would apply only if a different limit were in use.

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