Your annual salary is $240,000 and you have enough cash saved for a 30% down-payment on a home (regardless of price). Your only debt is a car that costs $2,000/mo. Your dream house has total taxes and insurance costs of $2,000/mo.

Your friend Fred has a salary of $36,000 and enough money for a down-payment on a home of 3% (regardless of price). Fred has debt for his car, which he pays $400/mo. Fred's dream house has total taxes and insurance costs of $400/mo.

1. With 28/36 ratios, how much principal and interest can you afford monthly for your mortgage?

2. Fred's program has 33/40 ratios. How much principal, interest, taxes and insurance monthly payments can Fred afford for his mortgage payments and escrow?

3. What is your loans LTV? What is your Fred's loan's LTV?