Luis wants to buy a home priced at $315,000. He plans to finance this amount less the down payment required. His mortgage payment would then be $2100. Luis has an annual income of $91,500 and $65,000 in savings. Luis has a car payment of $370, a student loan payment of $165 and a credit card payment of $45. Use a 20% down payment and the 28/36 ratio to determine if Luis is eligible for a loan. What would you advise him to do if he is not eligible?

A 20% down payment on $315,000 is $63,000, which Luis can cover with his $65,000 in savings. His gross monthly income is $91,500 ÷ 12 = $7,625, so 28% is $2,135; the $2,100 mortgage payment is below that limit. His total monthly debt payments are $2,100 + $370 + $165 + $45 = $2,680, below 36% of his income ($2,745). Luis meets both ratio limits and has enough for the down payment, so he is eligible for a home loan.

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