Alabama Real Estate Practice Exam

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Prepare for the Alabama Real Estate Exam. Utilize flashcards and multiple-choice questions, each coupled with hints and explanations. Ace your upcoming test!

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What is FHA's debt-to-income ratio requirement for mortgage payment expense to effective income?

  1. 25%

  2. 29%

  3. 35%

  4. 41%

The correct answer is: 29%

The correct answer for FHA's debt-to-income ratio requirement for mortgage payment expense to effective income is 29%. This means that a borrower's total mortgage payment, including principal, interest, taxes, insurance, and any homeowner association fees, should not exceed 29% of their effective income. This requirement is in place to ensure that borrowers are not taking on more debt than they can reasonably afford. Options A, C, and D are incorrect because they are not consistent with FHA's specific requirement of 29%. Option A is significantly lower than the correct answer, while options C and D are higher. So, while these options may be general guidelines for debt-to-income ratios, they do not accurately reflect FHA's specific requirement.

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