Given that your monthly expenses for the house that you want to purchase totals $1,562.30 (this includes the house payment, annual taxes, and the annual cost for home owners insurance) and your gross annual salary is $66,955.71, determine if you qualify for the purchase of the new home. If yes, what percent do you qualify by?

First convert the gross annual salary to a monthly amount: $66,955.71 ÷ 12 = about $5,579.64. Then divide the monthly housing expenses by the monthly gross salary: $1,562.30 ÷ $5,579.64 × 100 ≈ 28%. Since this is within the 28% housing-expense limit, you qualify at 28%, choice B.

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