Mortgage lenders have the 3628 rule in their mortgage, Ask an Expert

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Mortgage lenders have the "36/28" rule in their mortgage decisions. The "36/28" rule suggests that a borrow's monthly mortgage payment does not exceed 28% of his/her gross monthly income and that the total monthly payment does not exceed 36% of the gross monthly income. Refer back to Mortgage Payment Table below, if a borrow is to qualify for the mortgage application for the house s/he has in mind, how much should the minimum gross monthly and annual incomes be in order for the borrower to qualify?

House Price: 300,000

Down Payment: 10%

Interest Rate: 9% per year

Length of payment: 30 years

First Payment: 1/15/2009

Suppose that, in addition to the house mortgage, the borrower also has a 5-year 4.9% car loan of $18,000, and monthly payment of $345 to pay back his/her college student loans, how much should the minimum gross monthly and annual incomes be in order for the borrower to qualify the mortgage loan in the Mortgage Table below using the 36/28 rule.

House Price: $450,000

Down Payment: 20%

Interest Rate: 7.5% per year

Length of Mortgage: 15 years

First payment 1/15/16

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Financial Accounting, Accounting

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