20
QuizMultiple Choice

Applying for a Loan

Question 20 • 26-27 Ignite Technical Math-Financial Math - MA2007

Cindy would like to apply for a loan but knows that her debt-to-income (DTI) ratio will keep her from being approved. Her monthly expenses include an $800 rent payment, a $230 car payment, a $175 student loan payment and a $160 minimum payment for all three of her credit cards combined. Her current gross monthly income is $2,900.What minimum additional gross monthly income does Cindy need to get her DTI down to 36%?

Answer
A
$252.78
B
$405.56
C
$447.22
D
$891.67

Explanation

Add Cindy’s monthly expenses: $800 + $230 + $175 + $160 = $1,365. For a 36% DTI, her gross monthly income must be at least $1,365 ÷ 0.36 = $3,791.67. Subtract her current $2,900 income, and she needs at least $891.67 in additional gross monthly income, choice D.

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