Certified Financial Planner (CFP) Exam 2025 – 400 Free Practice Questions to Pass the Exam

To determine which lender threshold Darrin and Kathi meet, it's important to understand the two commonly used benchmarks in housing finance: the 28% benchmark and the 36% benchmark.

The 28% benchmark indicates that a borrower's monthly housing costs (which include mortgage payments, property taxes, insurance, and homeowners association fees, if applicable) should not exceed 28% of their gross monthly income. If Darrin and Kathi's monthly housing costs of $1,500 represent 28% or less of their gross income, then they meet this benchmark.

The 36% benchmark considers the total monthly debt service, which includes not just housing costs but also other debts such as credit cards, car loans, and student loans. Therefore, if their total monthly debts do not exceed 36% of their gross income, they meet this threshold as well.

In this case, the correct answer suggests that their monthly housing costs of $1,500 align with the 28% benchmark, implying that their gross income is sufficient for that percentage. However, this doesn’t necessarily address the total debt picture related to the 36% benchmark.

Thus, the indicator that they meet the 28% benchmark but may or may not