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Mr . and Mrs . Vargas are looking for a home they want to be pre - qualified for the loan. Together they earn $

Mr. and Mrs. Vargas are looking for a home they want to be pre-qualified for the loan. Together they
earn $150,000 annually and have saved $20,000 for down payment. Their current car debt of $1000 a
month for two more years and a master card with minimum payment of $375. They have three children
and are looking for good schools and since they both work in downtown McAllen they want a maximum
commute time of 25 minutes. They want a home with good resale value and they plan to live in the
home for at least 10 years. They are looking for a 1800 to 2500 sq ft. home with four bedrooms and a
fenced backyard. They are also worried about security. They also dont want a high house payment.
1) Based on the following criteria to determine the maximum that the Vargas can borrow (Assume
property taxes of 4% and home insurance of $1200). What is the maximum loan amount they can
qualify for assume a $15,000 down payment. Using the internet find the appropriate loan assuming a
credit score of 750.
Loan to value ratio of 90%
Maximum mortgage payment to income ratio is 28%
Maximum income to mortgage, property taxes, Insurance and mortgage insurance 30%
Maximum income to all housing expense to all housing expenses and obligations 36%

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