Problem
Your annual salary is $110,000. A lender's qualification ratio for loan origination is 27% of your monthly income. The rate for a 30-year FRM mortgage is 7%.
1. What is the maximum monthly mortgage payment the lender will lend you?
2. What is the maximum loan size you qualify for?
3. Assuming you can come up with the 10% down payment, what is the most expensive house you can purchase?
4. How would your answer change if rates increased to 8%?