Question

sally spends $1,500 each month on her mortgage, mortgage insurance and property taxes. she has three credit cards with minimum monthly payments that total to $125.00 and a monthly car payment for $349.00. she currently brings in a gross monthly income of 3,750.00 from her job. calculate sallys debt-to-income (dti) ratio.
a. 40%
b. 43%
c. 49%
d. 53%

please select the best answer from the choices provided

a
b
c
d

Explanation:

Sum the total monthly debt payments

$$ \text{Total Monthly Debt} = \$1,500.00 + \$125.00 + \$349.00 = \$1,974.00 $$

Calculate the debt-to-income ratio

$$ \text{DTI Ratio} = \frac{\text{Total Monthly Debt}}{\text{Monthly Gross Income}} = \frac{1,974.00}{3,750.00} = 0.5264 $$

Convert to percentage and round

$$ \text{DTI Percentage} = 0.5264 \times 100\% = 52.64\% \approx 53\% $$

Answer:

• a. 40%
• b. 43%
• c. 49%
• d. 53% (Correct answer)