Question

Tom is retired. He receives retirement income each month in the amount of $2500 as well as Social Security income in the amount of $1200. Tom owns 4 rental properties that he receives $1680 in rental income each month on each rental property. Tom has mortgage payments in the amount of $3200. His wife drives a Lexus with a $540 car payment and he drives a Buick with a $395 car payment. What is Frenchy’s debt to income ratio?

Answer 1

77%

Step-by-step explanation:

The formula for calculating the debt to income ratio is:

Total monthly debt/total monthly income.

Therefore, we have to calculate the total of monthly debt and monthly income first.

Monthly debt:

Mortgage payments= $3,200

Wife's car= $540

Tom's car = $395

Total = $4,135

Monthly income:

Retirement income = $2,500

Social Security income = $1,200

Rental income = $1,680

Total = $5,380

Debt to income ratio:

$4,135/$5,380

= 0.77 X 100

= 77%