Question

Marianne earns a gross income of $5,500 per month and applies for a mortgage with a monthly PITI of $1,244. Mia has other financial obligations totaling $829 per month. What type of mortgage, if any, would Mirianne qualify for?

a. FHA only
b. FHA and Conventional
c. Conventional only
d. none

Answer 1

Marianne would qualify for a Conventional only mortgage.

Step-by-step explanation:

Marianne earns a gross income of $5,500 per month and has other financial obligations totaling $829 per month. To determine what type of mortgage Marianne would qualify for, we need to calculate her debt-to-income ratio (DTI). The DTI is calculated by dividing her total monthly debts by her gross monthly income and multiplying by 100%.

First, we calculate Marianne's total debts by adding her monthly financial obligations (including the monthly PITI) to her other financial obligations:
Total Debts = Monthly PITI + Other Financial Obligations
Total Debts = $1,244 + $829
Total Debts = $2,073

Next, we calculate Marianne's DTI:
DTI = (Total Debts / Gross Monthly Income) x 100%
DTI = ($2,073 / $5,500) x 100%
DTI = 37.69%

The maximum DTI allowed for most conventional mortgage lenders is 43%. Since Marianne's DTI is below 43%, she would qualify for a Conventional only mortgage.