User`s guide

SER

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UIDE

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“Restricted” Qualifying

Buyers who make $68,000 annually and have $750 in long-term

monthly debt wish to buy a home offered at $175,000. They can only

afford $5,000 for the down payment. For what maximum loan

amount can they qualify? (Use previously stored 7.5% interest, 30-

year term, Tax/Ins./Mtg. Ins. rates of 1.5%, .25% and 0.6%, respec-

tively, and qualifying ratios of 28%:36%. Re-enter 0.6% mortgage

insurance rate, $50 assn. dues and $5,000 down. Note: If these val-

ues aren’t stored, you’ll need to re-enter them.)

STEPS KEYSTROKES DISPLAY

Clear calculator o o 0.00

Recall interest* ® ˆ 7.50

Recall term* ® T 30.00

Recall annual prop. tax %* ® t 1.50

Recall annual prop. ins. %* ® I 0.25

Re-enter annual MI rate • 6 s I 0.60

Enter homeowner’s dues 5 0 e 50.00

Enter down payment 5 ) d 5,000.00

Enter annual income 6 8 ) i 68,000.00

Enter monthly debt 7 5 0 D 750.00

Display qualifying ratios q 28.00-36.00

Find “restricted” qualifying

loan amount q “run” 137,725.41

— DO NOT CLEAR CALCULATOR —

*Note: If you’re not continuing from the previous problem, you’ll need to re-enter inter-

est, term, and in this case, property tax and insurance.

“Unrestricted” Qualifying

The amount calculated in the previous example is the loan they may

qualify for, based on current income and debt and the standard

28%-36% qualifying ratios. What are the buyer's actual income and

debt ratios? What does the “unrestricted” loan amount calculate to,

and which side is it based on (i.e., buyer's income or debt)? What is

the buyer’s maximum allowable debt?

STEPS KEYSTROKES DISPLAY

Find actual ratios q “run” 22.76-36.00

Find “unrestricted”

loan amount q UNR 170,870.75 LA INC*

Find allowable debt q 453.33**

*Note: The “INC” tells you this unrestricted Qualifying Loan Amount is based on the

buyer’s Income Ratio — therefore, the restricted Qualifying Loan Amount is based on

the buyer’s Debt Ratio. This means that if they pay off their monthly debt to $453/mo.

or lower (as seen in “allowable debt” calculation**), they may qualify for a mortgage

of approx. $170,000 or more and that $175,000 home (putting approx. $4-$5K down).