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1 May, 23:43

Hope is applying for an FHA loan to purchase a $360,000 condominium. Her proposed monthly mortgage payment is $1,850 and she has a $500 car payment and a $350 student loan payment. Using the fixed payment to income ratio, what would be her minimum monthly income in order to afford this loan?

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  1. 1 May, 23:58
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    Answer: $6289.07

    Explanation:

    Monthly mortgage = $1,850

    Car payment = $500

    Student loan = $350

    Note : 43% is the maximum debt to income ratio under FHA

    Therefore calculating Hope's total monthly debt;

    (Monthly mortgage + car payment + student loan)

    $ (1850 + 500 + 300) = $2700.

    Therefore Hope's minimum monthly income in other to afford the loan can be calculated by dividing her total monthly debt by the maximum debt to income ratio under FHA

    $2700 : 0.43 = $6,279.069

    =$6279.07
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