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HP 17Bii, 17Bii+, and 19Bii Calculators - Preliminary Qualification of a Buyer

Description
Lenders use percentage rules-of-thumb to estimate the amount of a loan for which a prospective buyer will qualify. This estimation is then used to determine the loan amount that the lender will be willing to finance. This amount is also useful to homebuyers who wish to determine the price of the home for which they qualify for before they begin searching the market. In performing a pre-qualification of a buyer, the following equation implements a technique of choosing between the lower of two criteria:
  • Income adjusted for fixed expenses such as taxes and insurance
  • Income adjusted for fixed expenses and current debt obligations.
Making a preliminary qualification of a buyer
To make a preliminary qualification of a buyer, do the following:
  1. Enter the QUALIFY equation into the Solver as follows:
    QUALIFY:0xINCxDEBTxT&I
    +IF(L(A:INCx%INQ÷100-T&
    I)<L(B:INCx%DTQ÷100-T&I
    -DEBT):G(A):G(B))xUSPV(
    I%YR÷12:YRSx12)=LOAN
  2. Verify the equation:
    • For the HP 17bii and 17bii+, press EXIT, EXIT, YES (to save), then CALC.
    • For the HP 19bii, press CALC.
  3. Store the following variables:
    • Monthly income in INC
    • Monthly debt payments in DEBT
    • Monthly taxes and insurance in T&I
    • Income qualifying percentage in %INQ
    • Debt qualifying percentage in %DTQ
  4. Press the MORE key.
  5. Store or calculate the following variables:
    • Annual loan interest rate as a percentage in I%YR
    • Number of years in the loan in YRS
    • Qualifying loan amount in LOAN
Example of making a preliminary qualification of a buyer
A couple has monthly income of $6,250, monthly debt of $750, and property taxes and insurance of $300 per month. The lender's qualifying factors are 28 percent for income and 36 percent for debt. Loan terms will be 10.5 percent annually for 30 years. How large a loan would the borrowers qualify for under these conditions?
Keys
Display
Description
Press 6250, then (NC
(NC=6250.00
Enters monthly income
Press 750, then DEBT
DEBT=750.00
Enters monthly debt
Press 300, then T&I
T((=300.00
Enters taxes and insurance
Press 28, then ((NQ
((NC=28.00
Press 36, then (DTQ
(DTQ=36.00
Press MORE
More variables
Press 10, [.], 5, then ((YR
((YR=10.5
Enters APR
Press 30, then YRS
YRS=30.00
Enters loan term
Press LOAN
LOAN=131,184.92
Calculates qualifying loan amount

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