A borrower who works 35 hours a week at $20 per hour has a front-end debt ratio of 31%. What is their maximum qualifying housing payment?

• A. A. $940.33
• B. B. $868.33
• C. C. $1,074.67
• D. D. $956.34

Answer: (A)

To determine the maximum qualifying housing payment, it is essential to calculate the borrower's monthly income and then apply the front-end debt ratio.

Firstly, calculate the borrower's weekly income. With the borrower working 35 hours at $20 per hour, the weekly income can be calculated as:

Weekly Income = Hours Worked per Week × Hourly Rate

Weekly Income = 35 hours/week × $20/hour = $700/week

Next, we need to convert the weekly income into a monthly income. This can be done by multiplying the weekly income by the number of weeks in a year (52) and then dividing by the number of months in a year (12):

Monthly Income = (Weekly Income × 52 weeks/year) / 12 months/year

Monthly Income = ($700 × 52) / 12 = $3,033.33

Now, we apply the front-end debt ratio of 31% to find the maximum housing payment. The front-end ratio considers the portion of the borrower's income that can be devoted to housing expenses, including principal, interest, taxes, and insurance (PITI):

Maximum Qualifying Housing Payment = Monthly Income × Front-End Debt Ratio

Maximum Qualifying Housing Payment = $3,033.