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The following formulas are used in Information Products' FMS® or Instant Impact® programs.

Loan Qualifier Formulas

Back Income to Qualify = ( BackPiti + FixedExp ) / BackRatio

Monthly Payment = Principal * Interest / ( 1 - ( 1 + ( Interest ) ) ^ (-1 * Term ) ) )

Front Piti = MonthlyIncome * FrontRatio / 100

Back Piti = MonthlyIncome * BackRatio / 100

Front Income = FrontPiti - ( Tax + Insurance )

Back Income = BackPiti - ( Tax + Ins + FixedExp )

Max Loan Front = PresVal( FrontIncome, Interest, Term )

Max Loan Back = PresVal(BackIncome, Interest, Term )

Actual Piti = MonthlyPayment + Tax + Insurance

Qualified = FrontPiti >= ActualPiti and BackPiti >= ActualPiti + FixedExpenses

Present Value:

nT := (1 + nRate) ^ nPmts

PV = MonthlyPayment / ( ( nT / ( nT - 1 ) ) * InterestRate)

APR Calculations

Calculate APR by the following method:

1. Calculate the monthly payment using the full principal amount.
2. Calculate the total fees and points and subtract from the principal amount.
3. Iteratively calculate a new payment amount, adding a small increment to the interest rate until the new payment amount is equal to the original payment amount.
4. The APR is equal to the original interest rate plus the amount of the increment.

nNp = monthly payment

nFees = ( Principal * Points ) + Fees

nInc = 0.000001

REPEAT

nP := payment( Principal - nFees, Rate + nInc, Term )

nInc := nInc + 0.000001

UNTIL ( nP >= nNp )

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