Case Study 2 (Student ID: 101453710)

Annual Income: $53,710 or Monthly Income: 53,710/12 = $4475.833

Tax Expense: 4475.833/20 = $223.792

Heat: 4475.833/22 = $203.447

10 payment left for student loan, Payment: 4475.833/12 = $372.986

To find out the maximum monthly mortgage payment, substitute the given values into GDS & TDS ratio

For GDS,

Monthly mortgage payment + Property tax + Heat = 0.39

Gross monthly income

Monthly mortgage payment + $223.792 + $203.447 = 0.39

$4475.833

Monthly mortgage payment = $1318.336

For TDS,

Monthly mortgage payment + Property tax + Heat + Other debt payment = 0.44

Gross monthly income

Monthly mortgage payment + $223.792 + $203.447 + $372.986 = 0.44

$4475.833

Monthly mortgage payment = $1169.142

$1169.142 is the maximum monthly mortgage payment they can qualify for

To find the final price of the house I can afford, we need to find the Mortgage value first for that we will
use the TVM calculation.

P/Y: 12 C/Y: 2

N: 25*12 = 300, I/Y: 5, PMT: $1169.142, FV: 0

Thus, the PV: $201,019.941

The mortgage value is $201,000 (Round to nearest $100)

Final price of house: Mortgage value + Down payment

$201,000 + $50,000 = $251,000

Loan to value ratio: Principal of loan * 100

Value of Property

It should be less than or equal to 80%

$201,000 * 100 = 80%. (It is equal to 80% hence it qualifies)

$251,000