Which of the following correctly states the “rule of thumb” formula traditionally used by lenders in determining whether or not a prospective buyer can afford a particular housing purchase?
Group of answer choices
The monthly cost of buying and maintaining the home should not exceed 36% of the borrower’s gross monthly income, and the payments on all debts together should not exceed 28% of the buyer’s monthly income.
The monthly cost of buying and maintaining the home should not exceed 28% of the borrower’s gross monthly income, and the payments on all debts together should not exceed 36% of the buyer’s monthly income.
The annual cost of buying and maintaining the home should not exceed 50% of the borrower’s gross annual income, and the payments on all debts together should not exceed 64% of the buyer’s annual income.
The annual cost of buying and maintaining the home should not exceed 36% of the borrower’s gross annual income, and the payments on all debts together should not exceed 28% of the buyer’s annual income.