You are a loan officer and a first-time home buyer has requested that you help her determine how much she can afford to take out as a loan to help purchase a home. She is currently renting an apartment and has presented to you the following information for you to use in your analysis of her financial position:

Gross annual income: $56,000

Auto lease payment: $425/mth

Credit card minimum payment: $80/mth (Owes $4,200)

Student loan payments: $225/mth

Current utility payments: $135/mth on average

Health insurance costs: $200/mth

Auto insurance costs: $280/mth

Grocery/food costs: $400/mth

Dividend income from Stocks: $600/qtr

Gasoline costs: $225/mth

Miscellaneous living expenses: $500/mth

Estimated Federal Income Taxes: $4,000/year

Estimated State Income Taxes: $2,200/year

Estimated payroll taxes: $4,800/year

Property taxes for new home: $2,400 annual estimate

Homeowners insurance for new home: $600 annual estimate

The borrower has strong credit and has sufficient cash in the bank to pay for a down payment of 20% as well as any closing costs. The borrower has sufficient cash reserves to pay up to 2 discount points to lower her rate but only intends on staying in the home for 5 year or less. Programs that are available for you to consider for the borrower include the following: 3/1 ARM at an initial rate of 3.0% (30-year amortization) 5/1 ARM at an initial rate of 3.25% (30-year amortization) 30-year fixed rate note at 4.0% 15-year fixed rate note at 3.5% Each discount point paid would lower the 3/1 ARM and the 15-year Fixed Rate note by 0.375% and the 5/1 ARM and 30-year Fixed Rate note by 0.25% Given the information above, please determine 1) how much of a loan would this borrower qualify for under each loan program above if the 28/36 rule is applied?, 2) which of the programs do you think would be best for this borrower, and why?