What is the exam-ready answer?
| Official syllabus topic | Financing and Real Estate Calculations: borrower qualification and ratio application |
|---|---|
| Official PSI area | Real Estate Calculations |
| Published weight | 7% of the 100-question national portion |
| Source edition | PSI Georgia Candidate Information Bulletin dated July 1, 2026 |
The Rule
PSI publishes a weight for the complete official area, not a guaranteed count for this individual calculation. Follow the stated facts, units, time basis, and rounding instruction.
Formula and variables
| Symbol or term | Meaning |
|---|---|
| Monthly housing expense | The housing payment components the question directs you to include |
| Recurring monthly debts | Required monthly debt obligations stated in the problem |
| Gross monthly income | Qualifying monthly income before taxes and deductions |
Step-by-step method
- Convert annual gross income to monthly income by dividing by 12 when necessary.
- Identify whether the question asks for the housing ratio or total DTI.
- Add only the recurring monthly obligations stated for the requested ratio.
- Divide the correct monthly obligation total by gross monthly income and convert to a percentage.
- Compare the result with a qualification limit only when the question supplies that limit.
Georgia-specific distinction
Worked examples
Example 1: Housing and total ratios
Scenario. A buyer earns $84,000 gross annually. Proposed monthly housing expense is $1,820. Other recurring monthly debts total $630.
- Gross monthly income = $84,000 / 12 = $7,000.
- Housing ratio = $1,820 / $7,000 = 0.26, or 26%.
- Total monthly obligations = $1,820 + $630 = $2,450.
- Total DTI = $2,450 / $7,000 = 0.35, or 35%.
Answer. The housing ratio is 26% and total DTI is 35%.
Reasonableness check. Total DTI must be at least as high as the housing ratio because it includes additional debts.
Example 2: Maximum payment under a stated ratio
Scenario. A question allows a 30% housing ratio for a borrower with $6,400 gross monthly income.
- Maximum housing expense = income x allowed ratio.
- $6,400 x 0.30 = $1,920.
Answer. The maximum monthly housing expense under the stated ratio is $1,920.
Reasonableness check. $1,920 is 30 cents of every $1 of $6,400 monthly income.
Common exam traps
- Dividing by net take-home pay when the question requires gross income
- Leaving annual income in the denominator while using monthly debts
- Using housing expense alone for a total DTI question
- Assuming a fixed approval threshold that the question never states
Original practice questions with detailed explanations
These original instructional questions map to the July 1, 2026 PSI outline. They are not copied from PSI or any live examination. Write the setup before opening the explanation.
Question 1A borrower earns $78,000 gross per year. Proposed housing expense is $1,690 a month, a car payment is $410 a month, and a student loan is $200 a month. What is total DTI?
- A. 2.95%
- B. 26.0%
- C. 32.3%
- D. 35.4%
Show answer and explanation →
Answer: D. 35.4%
Gross monthly income is $6,500, and total obligations are $2,300, so DTI is $2,300 / $6,500 = 35.4%. 26.0% is the housing ratio, which leaves out the other debts a total ratio requires. 2.95% divides monthly debts by annual income.
Question 2A lender's stated maximum total DTI is 43%. The borrower's gross monthly income is $7,500 and recurring monthly debts are $725. What is the most the monthly housing expense can be?
- A. $2,500.00
- B. $2,913.25
- C. $3,225.00
- D. $3,950.00
Show answer and explanation →
Answer: A. $2,500.00
Total allowed obligations are $7,500 x 0.43 = $3,225, and subtracting the $725 of debts leaves $2,500 for housing. $3,225 forgets that the other debts share the same limit. $2,913.25 subtracts the debts from income before applying the ratio.
Question 3A borrower's gross monthly income is $6,000 and take-home pay is $4,500. Proposed housing expense is $1,620 and other monthly debts are $480. What is the housing ratio?
- A. 2.25%
- B. 27.0%
- C. 35.0%
- D. 36.0%
Show answer and explanation →
Answer: B. 27.0%
The housing ratio divides housing expense by gross monthly income: $1,620 / $6,000 = 27%. 36.0% divides by take-home pay, but DTI uses gross income. 35.0% adds the other debts, which belong in the total ratio, not the housing ratio.
Ready to move on?
You have this calculation down when all of these are true.
- I match monthly debts with monthly gross income.
- I can separate housing ratio from total DTI.
- I can solve a ratio forward and backward.
- I do not substitute net income for gross income.
- I use a stated underwriting limit without presenting it as universal.
Recommended next lesson
Continue with Gross Rent Multiplier. DTI measured a borrower's income against debts, and the next lesson measures a rental property instead, dividing sale price by gross rent to get a multiplier with no percent sign.
Return to the complete calculation hub, formula sheet, or mixed math drill.