Tom wants to buy a house priced at $500,000. He plans to put 20% down and a mortgage banker will lend him the remainder at a 6% fixed rate for 30 years, with monthly payments to begin in one month. Tom is required to pay 2 points.

1. Tom has a monthly income of $11,000. Tom estimates annual real estate taxes as 1.25%, annual hazard insurance as 0.4%, and annual maintenance as 1% of the purchase price. At closing, Tom will have to fund 6 months of property taxes, and 14 months of hazard insurance. What is the housing expense ratio?