Debt-to-Income Ratios - USA Mortgage, Las Vegas, NV

Debt to Income Ratio

Your debt to income ratio is simply a way of determining how much money is available for your monthly mortgage payment after all your other recurring debt obligations are met.

Debt limit

There is generally a debt limit associated with each type of loan, such as a 28/36 qualifying ratio for a conventional loan. These qualifying ratios are guidelines. An excellent credit history can help you qualify for a mortgage loan even if your debt load is over and above the limit.

Understanding the qualifying ratio

Typically conventional loans have a qualifying ratio of 28/36. Although, depending on your credit score and loan to value, they could be much higher. Usually an FHA loan will allow for qualifying ratio of 29/43, but again, they could go higher depending on other factors.

The first number in a qualifying ratio is the maximum percentage of your gross monthly income that can be applied to housing (including loan principal and interest, private mortgage insurance, hazard insurance, property taxes and homeowner's association dues).

The second number is the maximum percentage of your gross monthly income that can be applied to housing expenses and recurring debt. Recurring debt includes things like car loans, child support and monthly credit card payments.

For example:

With a 28/36 qualifying ratio:

Gross monthly income of $3,500 x .28 = $980 can be applied to housing
Gross monthly income of $3,500 x .36 = $1,260 can be applied to recurring debt plus housing expenses

With a 29/43 qualifying ratio:

Gross monthly income of $3,500 x .29 = $1,015 can be applied to housing
Gross monthly income of $3,500 x .41 = $1,505 can be applied to recurring debt plus housing expenses

Another way of figuring out your debt ratio is to add your estimated new mortgage payment, plus taxes and insurance (PITI) with your monthly debt payments, then divide the total by your gross monthly income. The result is your housing debt ratio.

For example:

Car payment of $300 a month

Credit card payment of $100 a month

Gross monthly income of $3500 a month

Estimated new house payment of $1300 a month

$1300 + $300 + $100 = $1700

$1700 ÷ $3500 = .49 or 49% debt ratio

There are programs that allow for as much as 65% debt ratios!

Simply guidelines

Remember these are just guidelines. We’d be happy to pre-qualify you to determine how large a mortgage loan you can afford. We look forward to helping you buy your home.

GET PREQUALIFIED!

If you are buying or refinancing, geting pre-qualified is
empowering. Prequalified buyers are confident, educated buyers.
Pre-qualifying before you refinance means you want to know all
your choices. Simply answer the few simple questions below and I
will respond very shortly.

For a Purchase

Purchase Price:
*Primary home or investment?:
*Down Payment?:
*Max monthly house payment:

For a Refinance

*Loan Amount?:
*Cash out? How much?:
*Current balance on all mortgages:
*What is your home's value?:
*Primary home or investment?:

For Both Purchase and Refinance

*Borrower gross monthly Income:
*Borrower credit--good, fair, poor?:
Co-borrower gross monthly Income:
Co-borrower credit--good, fair, poor?:
*Monthly loan, credit card debt, all borrowers:

Additional Information

Details, such as credit issues, etc.:

How can I contact you?

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Phone:

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