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In home mortgage lending, it is common for lenders to specify a maximum housing cost (PITI) ratio of 28% to 33% of monthly gross income.

In home mortgage lending, it is common for lenders to specify a maximum housing cost (PITI) ratio of 28% to 33% of monthly gross income. Assume a housing cost ratio of 30% and the borrower qualification data below.

What DCR is the lender effectively applying to the borrower?

image text in transcribed

House Price Down Payment Loan Amount Loan Payment Taxes Insurance Monthly Housing Cost Monthly Income Required 400,000 5% (20,000) 380,000 6.50% 2,402 400 133 2,935 9,784

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