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— 65
Qualifying Loan Amount and Sales Price
(Complete Example Including Down Payment, Tax / Insurance,
Monthly Association Dues)
Buyers who make $75,000 annually and have $500 in long-term
monthly debt wish to buy a home but can only afford $5,000 down. If
you include estimated annual property taxes and insurance of 1.5%
and 0.25%, respectively, a mortgage insurance rate of 0.6% and
monthly homeowner’s association dues of $50, for what loan amount
can they qualify? What sales price can they afford? What’s their total
payment?
(Use 7.5% interest, 30-year term and qualifying ratios of
28%:36%).
STEPS
KEYSTROKES
DISPLAY
Clear calculator
o o
0.00
Enter annual Income
7 5 ) i
75,000.00
Enter monthly Debt
5 0 0 D
500.00
Enter Down Payment
5 ) d
5,000.00
Set annual prop. Tax rate
1 • 5 t
1.50
Set annual prop. Ins. rate
• 2 5 s t
0.25
Set annual Mtg. Ins. rate
• 6 s 9
0.60
Enter homeowner’s dues
5 0 s D
50.00
Enter Interest
7 • 5 ˆ
7.50
Enter Term
3 0 T
30.00
Enter Qualifying Ratios
2 8 : 3 6 q
28.00-36.00
Find Qualifying Loan Amt.
q
“run” 189,119.31
Find Price
P
194,119.31
— DO NOT CLEAR CALCULATOR —
Now find the monthly P&I payment (principal & interest), PITI pay-
ment (principal, interest, tax and insurance) and Total Payment
(including monthly association dues):
STEPS
KEYSTROKES
DISPLAY
Find P&I Payment
p
“run” 1,322.35
Find PITI Payment
p
1,700.00
Find total Payment
p
1,750.00
