Question

You work for a lender that requires a 20% down payment and uses the standard debt-to-income ratio to determine a person’s eligibility for a home loan. Of the following, choose the person that you would rate the highest on their eligibility for a home loan? Person A Person B Person C Person D home value $175,000 $200,000 $220,000 $250,000 income $51,000 $58,000 $63,000 $67,000 savings $35,000 $40,000 $42,000 $50,000 recurring debt $350 $250 $200 $450 a. Person A b. Person B c. Person C d. Person D.

Answer 1

The person eligible for the home loan possesses less debt as compared to the income. Person C has the highest rate on eligibility for a home loan.

The debt to income ratio is the ratio that defines the eligibility of the person that can avail him of the other amount of loans and borrowings.

In the context mentioned above, person C is eligible for the borrowing or the home loan because he has the highest income as compared to debt, and also the debt ratio is least as compared to the other. The debt to income ratio of person C is 3.1%.

Therefore, the correct option is c.

To know more about the calculation of the debt to income ratio, refer to the link below:

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