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Emily is 28 years old and works as an electric lineman. She is single and wants to buy a townhome or apartment.
She earns $84,000 per year ($7,000 per month)
Her only debt payments are a $200 monthly auto loan payment. She has no student loans, as she did a paid apprenticeship shortly after high school.
2.Using the 28-36 rule, what monthly housing costs can she afford?
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GPT-5 mini
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Gross monthly income = $84,000 / 12 = $7,000.
- Front‑end (housing) limit: 28% × $7,000 = $1,960/month.
- Back‑end (total debts) limit: 36% × $7,000 = $2,520/month.
Subtract current non‑housing debt ($200 auto payment) → $2,320 available for housing.
The binding limit is the lower of the two, so she can afford up to $1,960 per month in housing costs (PITI + HOA/condo fees, mortgage insurance, etc.).
- Front‑end (housing) limit: 28% × $7,000 = $1,960/month.
- Back‑end (total debts) limit: 36% × $7,000 = $2,520/month.
Subtract current non‑housing debt ($200 auto payment) → $2,320 available for housing.
The binding limit is the lower of the two, so she can afford up to $1,960 per month in housing costs (PITI + HOA/condo fees, mortgage insurance, etc.).
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