Joey would like to apply for a loan but knows that his high debt-to-income (dti) ratio will probably get in his way. he would like to lower his dti ratio by lowering the amount of his gross monthly income that goes to living expenses. joey's current monthly expenses include a rent payment of $1,100, a $178 car payment, and a combined minimum payment of $220 for his credit card debt. his current gross monthly income is $3,600. if joey moves to a new apartment, what is the maximum monthly rent payment he can make and still maintain a dti ratio of 36%?

Question

Mathematics

Belen Myers

13 September, 01:27

Joey would like to apply for a loan but knows that his high debt-to-income (dti) ratio will probably get in his way. he would like to lower his dti ratio by lowering the amount of his gross monthly income that goes to living expenses. joey's current monthly expenses include a rent payment of $1,100, a $178 car payment, and a combined minimum payment of $220 for his credit card debt. his current gross monthly income is $3,600. if joey moves to a new apartment, what is the maximum monthly rent payment he can make and still maintain a dti ratio of 36%?

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Answers (1)

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Dayanara · Answer 1

Debt-to-income ratio = total debt / total income

debts:

rent payments = 1,100

car payments = 178

card payments = 220

total debts: 1,100 + 178 + 220 = 1,498

income:

gross monthly income: 3,600

dti = 36%

dti = 1,498/3,600 = 0.416 or 41.6%

36% x 3,600 = 1,296 this is the should be amount of the total debt.

1,296 - 178 - 220 = 898

$898 is the maximum monthly rent payment Joey can make and still maintain a dti ratio of 36%.