A borrower with a stable monthly income of $4,000 and recurring debts of $600 is seeking an FHA loan. What is the maximum monthly payment he would qualify for?

To determine the maximum monthly payment a borrower would qualify for with an FHA loan, it's essential to understand the guidelines set by the Federal Housing Administration regarding debt-to-income (DTI) ratios. Generally, FHA guidelines suggest that a borrower's total monthly housing expenses (including mortgage payment, property taxes, and insurance) should not exceed 31% of their gross monthly income.

In this scenario, the borrower has a stable monthly income of $4,000. When calculating the maximum allowable monthly payment, we first need to find 31% of this income:

[

31% \text{ of } $4,000 = $4,000 \times 0.31 = $1,240

]

This calculation shows that the maximum principal, interest, taxes, and insurance (PITI) payment the borrower can afford is $1,240.

It's also important to consider the borrower’s recurring debt obligations, which total $600. The calculation of the borrower's debt-to-income ratio involves both the total housing expenses and any other debts. However, since the question specifically asks for the maximum monthly payment without requiring a deduction of these debts, the calculated $1,240 stands as the appropriate limit for the housing expenses based solely on