2. Mortgage classifications and borrower creditworthiness

Suppose Poornima is planning to purchase a home and in her mortgage application, she declares that she plans to put a 4 percent down payment on the home. Additionally, Poornimas debt-to-income ratio and credit score are 41 percent and 580, respectively.

Assuming that Poornimas mortgage application is accepted by the lender, how would her mortgage likely be classified?

Conventional mortgage

Federally insured mortgage

Prime mortgage

Subprime mortgage

Suppose Hubert, Kate, and Manuel are looking to purchase homes in Chicago, and they all happen to find exactly the home they are looking for within a mile of one another, each costing $240,000. None of the homeowners have enough cash to purchase their selected home outright, so each of them needs to submit a mortgage application in order for their lender to determine whether or not the borrower will be able to repay the mortgage loan. Suppose Hubert, Kate, and Manuel all use Chase Bank as their lender and that they all submit their mortgage applications at the same time.

The following table shows: (1) the amount that each borrower suggests they will put as a down payment on their home, (2) each borrowers debt-to-income ratio, and (3) each borrowers credit score.

Using the information in the table, answer the question that follows.

Borrower	Down Payment	Debt-to-Income Ratio	Credit Score
Hubert	$48,000	13%	730
Kate	$21,600	28%	470
Manuel	$28,800	18%	610

Given the information in the table, which of the three borrowers has the strongest mortgage application?

Hubert

Kate

Manuel