Mortgage affordability. Meghan and Laurens have an annual income of $114,000 and want to buy a home. Currently, mortgage rates are 3.0 percent. They want to take out a mortgage for 30 years. Real estate taxes are estimated to be $2,936 per year for homes similar to what they would like to buy, and homeowner's insurance would be about $945 per year.https://www.policygenius.com/homeowners-insurance/how-much-does-homeowners-insurance-cost/,https://beacon.schneidercorp.com/

Using a 28 percent front end ratio, what are the total monthly expenditures for which they would qualify?

Monthly gross income x 0.28

Subtract monthly real estate taxes

Subtract monthly homeowners insurance

Equals qualified monthly mortgage payment (without taxes and insurance)

Using a 36 percent back end ratio, what monthly mortgage payment (including taxes and insurance) could they afford given that they have an automobile loan payment of $554, a student loan payment of $393, and credit card payments of $284?https://www.experian.com/blogs/ask-experian/what-is-the-average-car-payment/,https://www.fool.com/student-loans/heres-average-student-loan-payment-how-lower-yours/,https://www.nerdwallet.com/blog/average-credit-card-debt-household/

Monthly gross income x 0.36

Subtract monthly car loan payment

Subtract monthly student loan payment

Subtract monthly credit card payment

Equals qualified monthly mortgage payment (including taxes and insurance)

Subtract monthly real estate taxes

Subtract monthly homeowners insurance

Equals qualified monthly mortgage payment

(without taxes and insurance)