Question

Cindy 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


Please select the best answer from the choices provided

A
B
C
D

Answer 1

First sum her monthly debts: 800 + 230 + 175 + 160 = 1,365.

We need 1,365 / (2,900 + x) = 0.36, so
2,900 + x = 1,365 / 0.36 = 3,791.666...
x = 3,791.666... − 2,900 = 891.666... ≈ 891.67

Answer: D.