Question

indy 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%?
a.
$252.78
b.
$405.56
c.
$447.22
d.
$891.67

Answer 1

Total monthly debt = 800 + 230 + 175 + 160 = $1,365.

We need 1,365 / (2,900 + x) ≤ 0.36 → 2,900 + x ≥ 1,365 / 0.36 = 3,791.666...

So x ≥ 3,791.666... − 2,900 = $891.666... → $891.67.

Answer: d. $891.67