Qualifying example 2
Use the same guidelines to go over qualifying example 2: Joe and Teresa Ramirez.

1. What happens when you compare the allowable monthly housing costs with the costs of the house the Ramirez family would like to buy? Answer: They are well within the allowable costs.

2. What happens, however, when you compare their monthly costs with their allowable monthly debt? Answer: They have more than the allowable amount of debt.

3. Ask students what they believe the Ramirez family needs to do. Answer: Reduce their debt.

Comprehension check
1. After you have carefully reviewed the sample qualifying worksheet, divide students into small groups to complete the comprehension questions. Make sure they thoroughly understand how to read the forms before you expect them to fill in
their own.

2. If students need more practice, invent some additional qualifying
examples using the worksheet on page 29. Or have students invent
their own examples and exchange worksheets to practice.

A note on qualifying
An often-quoted guideline says you can afford a house that costs up to two and one-half times your annual gross income. If you are buying a house with someone else (spouse, parent, adult child, partner/companion, brother or sister, etc.), you can also consider the co-borrower’s annual gross income in deciding how expensive a home you can buy. According to this guideline, if you and your co-borrower together have an annual income of $20,000, your new home should cost no more than $50,000. Remember, this is just a guideline and not a hard-and-fast rule.