Question 1200962
borrower's total monthly debt, including property taxes, cannot exceed 43% of the borrower's pre-tax monthly income.
the foley's pre-tax annual income is 72,000.
divide that by 12 to get a pre-tax monthly income of 6,000.
the property tax on the home they wish to purchase is 6,000 per year.
divide that by 12 to get 500 per month.
the mortgage is 300,000 for 30 years at 5% per year compounded monthly.
the monthly payment required would be equal to 1,610.46.
add 500 to that to get 2,110.46 monthly payment required.
that covers the mortgage and the property tax.
their debt limit would be .43 * 6000 = 2580 per month.
since 2,110.46 is less than that, they can afford the house.