SOLUTION: The Jackson’s gross monthly income is $6500. They have 13 remaining payments of $320 on a new car and 6 remaining payments of $76 on a washer and dryer. The taxes and insurance o
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Question 1173050: The Jackson’s gross monthly income is $6500. They have 13 remaining payments of $320 on a new car and 6 remaining payments of $76 on a washer and dryer. The taxes and insurance on the house are $125 per month. What maximum monthly payment does the banks loan officer feel that the Jackson’s can afford?
$1820.00
$1854.00
$1709.12
$1730.40 Answer by CPhill(1959) (Show Source):
You can put this solution on YOUR website! Here's how to solve this problem:
**1. Calculate Total Monthly Debt:**
* Car payment: $320
* Washer/dryer payment: $76
* Taxes and insurance: $125
* Total existing debt: $320 + $76 + $125 = $521
**2. Determine Maximum Allowable Debt:**
* A common guideline for a maximum debt-to-income ratio (DTI) is 36%.
* Maximum allowable debt: $6500 * 0.36 = $2340
**3. Calculate Maximum Monthly Payment:**
* Maximum monthly payment: $2340 - $521 = $1819
**Answer:**
The closest answer is $1820.00
