11-03-2012 01:38 PM
I'm not completely sure I understand the terminology, so I was hoping to get some help/verification regarding FHA's requirement of "gross monthly salary must be greater than 31% of the sum of the monthly mortgage plus monthly taxes" , and "gross monthly salary must be greater than 43% of the sum of the monthly mortgage plus monthly taxes and monthly debt payments". I earn $2,700 gross monthly. The home I'm wanting to purchase is $85,000. With 3.5% down, my actual loan would be about $82,000. I'm planning on going thru FHA for a 15 yr. fixed at say 3.5 interest (hopefuly the rates will be in that ballpark come Feb.). My only other monthly payments will be $288 for auto and $45 on credit card. Based on these figures, I "think" I'm OK, but wanted someone who's much sharper than me at this stuff to verify. My credit score is 685. THANKS
11-03-2012 04:55 PM - edited 11-03-2012 04:57 PM
My understanding of this using your front/back end ratios below is that your mortgage payment would have to be $837 or less including PITI plus HOAs if applicable (front end). Also all of your monthly debt including your mortage payment/housing cost would need to be under $1161 per month (back end). That being said if you make it through automated underwriting and have a mid score of at least 640 you may have much greater flexibility on the back end ratio, depending on the lender. My MO has also said in casual conversation that he's seen applicants get approved with a 48% back end ratio.
I don't think anyone can answer your question for sure about your numbers specifically without the estimated mortgage payment including tax, insurance, and HOA fees.
11-03-2012 05:58 PM
Thanks for your response. The "front end" figure of $837 is what I came up with also. Regarding other issues, there is no HOA involved and annual taxes are estimated to be $1,260 (or $105 monthly).
IMPORTANT INFORMATION: All FICO® Score products made available on myFICO.com include a FICO® Score 8, along with additional FICO® Score versions. Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more
FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.