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22 June, 20:49

A borrower earns $8,000/month and makes credit card and car note payments of $900. A conventional lender requires a 30% income ratio. What monthly amount for housing expenses (principal, interest, taxes, insurance) will the lender allow this person to have in order to qualify for a conventional mortgage loan?

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  1. 22 June, 20:57
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    Answer: The lendor will allow for $1500 for the housing expenses.

    This lendor is allowing 30% for the debt. So, we start by multiplying 8000 times 0.3 which equals 2400.

    However, we have to subtract the current debts of 900.

    2400 - 900 = 1500
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