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Home Buyer Qualification Calculations

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question 1 of 3

If Joe has an income of $65,000 per year, what monthly mortgage payment can he afford using an income and expense ratio of 28%?

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1. Bill has a $555 car payment. He makes $45,000 a year. If his lender will only approve a loan for him with a 42% debt-to-income ratio, what is his maximum monthly mortgage payment?

2. Which of the following best describes a situation where a buyer can make the mortgage payments but has little ability to spend on anything else?

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About This Quiz & Worksheet

The purpose of the quiz and worksheet is to help you check your comprehension of the calculations for getting a loan to buy a house. Some topics you can expect to find on the quiz include the adjustable rate mortgage and the purchase price of homes.

Quiz & Worksheet Goals

Working through the quiz and worksheet lets you see how much you know about:

  • The income and expense ratio
  • Finding the maximum monthly mortgage payment using the debt-to-income ratio
  • How to increase the maximum price of a home if a person is coming up against the debt-to-income ratio limit
  • The risk of using an adjustable rate mortgage to qualify for a larger loan

Skills Practiced

  • Reading comprehension - ensure that you draw the most important information from the lesson on qualifying home buyers
  • Information recall - access the knowledge you have gained about a situation where a person can afford mortgage payments and not have money for anything else
  • Knowledge application - use your knowledge to answer questions about finding monthly mortgage payments

Additional Learning

As you complete the lesson named Home Buyer Qualification Calculations, you'll get to cover more topics like:

  • What the income and expense ratio is
  • Using the debt-to-income ratio
  • How real estate agents qualify buyers
  • Meaning of the term 'house poor'
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