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Finding Income Required and Allowable Monthly Debt
Using the 28%:36% ratios, how much income would a buyer need to
finance a $250,000 home if they put 20% down? What is the maxi-
mum allowable debt? What is the dollar down payment and loan
amount? What is the monthly payment? Use 6.75% interest for 30
years. Estimate property tax/insurance rates of 1.5% and 0.25%,
respectively. Clear mortgage insurance rate to zero, as they are put-
ting 20% down.
STEPS
KEYSTROKES
DISPLAY
Clear calculator
o o
0.00
Enter annual interest
6 • 7 5 ˆ
6.75
Enter term in years
3 0 T
30.00
Enter tax rate
1 • 5 s 7
1.50
Enter insurance rate
• 2 5 s 8
0.25
Delete mortgage ins. rate
0 s 9
0.00
Enter sales price
2 5 0 ) P
250,000.00
Enter down payment %
2 0 d
20.00
Find dollar down payment
d
50,000.00
Find loan amount
l
200,000.00
Display qualifying ratios
q
28.00-36.00
Find income required
q
“run” 71,219.12
Find maximum allowable
monthly debt
q
“run” 474.79
Find P&I payment
p
1,297.20
Find PITI payment
p
1,661.78
