What is the borrower's housing expense ratio if PITI is $1,025 and weekly income is $925?

To determine the borrower's housing expense ratio, also known as the front-end ratio, you need to calculate the ratio of the borrower's monthly housing expenses (in this case, PITI) to their gross monthly income.

First, we identify that PITI (Principal, Interest, Taxes, and Insurance) is $1,025. This figure represents the total monthly housing payment.

Next, you need to convert the weekly income to a monthly income for an accurate comparison. Since there are approximately 4.33 weeks in a month, you can multiply the weekly income by 4.33:

Weekly income: $925

Monthly income: $925 × 4.33 ≈ $4,007.25

Now, we can calculate the housing expense ratio:

Housing Expense Ratio = PITI ÷ Monthly Income

= $1,025 ÷ $4,007.25 ≈ 0.255

This value can be rounded to 0.26 when expressed as a percentage or decimal. Hence, the answer reflects that the housing expense ratio indicates how much of the borrower’s income is going toward housing costs and is a crucial measure for evaluating a borrower's ability to handle mortgage payments.

This reasoning illustrates not only how the