Question

According to the Affordability Guidelines, if a family has a gross annual income of $63,000 and other significant debit obligations, what should be the maximum monthly mortgage payment the family could afford?

guideline 2 states: if a family has other significant family debt obligations such as car payments credit cards or student loans the family's monthly housing expenses including mortgage payment property taxes and private mortgage insurance should be limited to no more than 25% of their monthly gross income (income prior to deductions)
how do i work my problem with this guideline

Answer 1

@ParthKohli @welshfella @Smartestbruh

Answer 2

@agent0smith

Answer 3

@Fanduekisses @Ashleyisakitty

Answer 4

@sammixboo @mathmate @welshfella @MathMusician

Answer 5

i tried adding, diving and subtracting

Answer 6

@pphalke
So this time they have significant debits, so both guideline 1 and 2 apply.
Start with guideline #2, can you find what is 25% of their gross monthly income? This will be the maximum, \(including\) other obligations such as car loans, student loans, property taxes ,etc.

Answer 7

how do i do that?

Answer 8

Monthly gross income is equal to annual gross income divided by 12.

Answer 9

63000/12?

Answer 10

yep! go ahead and calculate!

Answer 11

5250

Answer 12

yes. what is the maximum they can spend on major obligations, \(including\) mortgages.

Answer 13

how do i calculate to get to that part i know its 1312.50

Answer 14

Can you please reread guideline #2, and tell me the percentage of gross monthly income they are allowed to contract?

Answer 15

25%

Answer 16

Try 5250*25%!

Answer 17

@pphalke
However, $1312.50 is not the answer!
The question asks how much the family can afford for the mortgage.
Guideline 2 says 25% of gross monthly income includes other obligations.
So what they can afford for the mortgage is
= $1312.50 \(less\) other obligations such as credit card, property taxes, student loan, mortgage insurance, etc.