Based on the buyer's gross income, her car and student loan payments, and the maximum debt-to-income ratio, the maximum monthly house payment that the bank will approve is $2,100.
The maximum debt-to-income ratio for housing the bank will approve is 28% which is:
= (90,000 / 12 months) x 28%
=$2,100
The maximum debt-to-income ratio is 36%:
= (90,000 / 12 months) x 36%
= $2,700
Allowance for debt:
= 2,700 - 300 - 200
= $2,200
There is therefore enough space to take on the maximum debt-to-income ratio for housing so the amount of $2,100 will be approved.
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