Question

You work for a lender that requires a 15% down payment and uses the standard debt-to-income ratio to determine a person's eligibility for a home loan. Of the following, choose the person that you would rate the highest on their eligibility for a home loan.

Person A
Person B
Person C
Person D
home value
$95,000
$107,000
$120,000
$128,000
income
$46,000
$53,000
$58,000
$60,000
savings
$20,000
$13,910
$18,000
$19,200
recurring debt
$310
$198
$265
$400

a.
Person A
b.
Person B
c.
Person C
d.
Person D



Please select the best answer from the choices provided


A
B
C
D

Answer 1

C

Reason: Required 15% down payments: A $14,250 (savings $20,000 ✓), B $16,050 (savings $13,910 ✗), C $18,000 (savings $18,000 ✓), D $19,200 (savings $19,200 ✓). Monthly DTI = recurring debt / (annual income/12): A 310/3833.33 = 8.09%, C 265/4833.33 = 5.48%, D 400/5000 = 8.00%. Person C has the lowest DTI and meets the down payment, so C is best.