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William wants to keep his debt-to-income ratio at the recommended 15% orlower William's house payment is
$1,012.84 and his car payment is $579.13. He also has student loans he is repaying in the amount of $250.00 per
month. William has eliminated credit cards spending except for budgeted items and continues to pay $300 per month
to eliminate his credit card debt. He is looking for a new job. What should his new annual salary goal be in order to
keep his debt-to-income ratio at the recommended 15%?

Respuesta :

sqdancefan

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Answer:

  about $171,400

Step-by-step explanation:

William's total monthly debt is ...

  $1012.84 +579.13 +250 +300 = 2141.97

On an annual basis, this is ...

  12 × $2141.97 = $25,703.64

This will be 15% of (25703.64/0.15) = $171,357.60.

William's new annual salary should be about $171,400 to keep his debt ratio at the recommended 15%.

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Additional comment

A debt ratio of 15% is a pretty aggressive target. Most mortgage lenders like to see the "front end" ratio (housing expense) less than 28%, and the "back end" ratio (all debt) less than 36%.

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