Suppose a family has a gross annual income of $39, 600 a. What is the maximum am

Question

Suppose a family has a gross annual income of $39, 600 a. What is the maximum amount the family should spend each month on a mortgage payment? b. What is the maximum amount the family should spend each month for total credit obligations? c. If the family's monthly mortgage payment is 80% of the maximum they can afford, what is the maximum amount they should spend each month for all other debt? a. The maximum monthly mortgage payment should be $ b. The maximum monthly total credit obligations should be $ c. The maximum amount they should spend monthly on all other debt is $

Explanation / Answer

a) Maximum Annual mortage should be 30% of gross income = 30 % (39,600) = $ 11,880

Monthly mortage will be $ 11,880 /12 = $ 990

(In some cases it is 28 % of gross income)

b) Maximum credit obligations will be (100-36) % of gross income = 64 % ( 39,600) = 64 (396) = $ 25344

Monthly credit obligations will be $ 25344 / 12 = $ 2112

c) Maximum debt they can afford is 36 % of available income = 36 % (20 % 39,600 ) = $ 2851.2

Maximum monthly debt = $ 2851.2 /12 = $ 237.69

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