Question

If maximum GDSR is 30% and TDSR is 40% what is the maximum mortgage payment that Paul can qualify for based on the following information about his financial situation? (Submit answer to the nearest dollar) Gross monthly income of $7460 Monthly heating and property tax of $609 Monthly car loan payments of $420 Monthly student loan payments of $360

Answer 1

GDSR or gross debt service ratio =(Mortgage payment+property taxes + heating expenses) / gross income

TDSR or total debt service ratio = (Mortgage payment+property taxes + heating expenses+other loan obligation) / gross income.

let the maximum Monthly mortgage payment be ''A''.

Hence,

30% = (A+$609+$0) / $7460

=>A+$609 = $2238

=>A or maximum Monthly mortgage payment = $1629.

Now,besed on the bove monthly mortgage payment of $1629,

TDSR = ($1629+$609+$420+$360) / $7460 = 40.5%, Whush is more than the maximum 40% limit.

Hence the maximum Monthly mortgage payment is less than $1629.

now at TDSR 40%, maximum Monthly mortgage payment=

=>40% =(A+$609+$420+$360) / $7460

=>A = $1595.

GDSR = ($1595+$609)/$7460 = 29.5 % WHICH IS WITHIN THE LIMIT OF 30%.

Hence maximum monthly mortgage payment = $1595