Which statement defines the term capacity? a. a borrower's willingness to repay a loan b. a borrower's ability to repay a loan c. a borrower's total assets

B. A borrower's ability to repay a loan

Step-by-step explanation:

Capacity measures the borrower's ability to repay a loan by comparing income against recurring debts and assessing the borrower's debt-to-income (DTI) ratio. Lenders calculate DTI by adding together a borrower's total monthly debt payments and dividing that by the borrower's gross monthly income. The lower an applicant's DTI, the better the chance of qualifying for a new loan. Every lender is different, but many lenders prefer an applicant's DTI to be around 35% or less before approving an application for new financing.

b

Step-by-step explanation:

1 is c

2 is a

3 is a

step-by-step explanation: