Question

Bob's GMI is $2,000 per month. He currently rents an apartment for $800 per month. Bob has a $199 monthly car lease and an $80 monthly credit card payment. What is Bob's qualifiying ratio?

Answer 1

Answer:

40/54

Explanation:

Bob's GMI = $2,000

Rent = $800

Car lease = $199

Credit card payment = $80

First, we'd calculate the percentage of his income that is his rent.

We have,

(800 ÷ 1000) x 100%

                             =40%

then we can calculate what percentage of his GMI is his spending

we have,

(800 + 199 + 80)  ÷ 2000

         (1079 ÷ 2000) × 100%

             = 0.54 × 100%

              = 54%.

This means that Bob's qualifying ratio is 40/54 i.e his housing/debt ratio.

With a qualifying ratio of 40/54, it is very impossible for him to get the smallest of mortgage loan product, etc.

Bob will need to find a co-borrower or another person that can lend a higher amount.

Cheers.