@Anonymous wrote:
Hello all! quick questions about Income mortgage calculators, if i make 21,000 a year, 0 debt, 700 CS acroos the board,no negatives on report, what i would be bascially quallified for is double my income? so almost 42,000 loan? is this right? can it be higher or only if income is higher?
Q2-if i was to qualify for mortgage loan of 42,000 and i were to get a 75,000 home would the bank still cover the rest of the cost due to my credit profile, would they take that risk if i was with the bank for 4 years or id simply have to pay the difference?
just a student learnig the ropes. i welcome all guidence, positive and negative advice!
-thank you and best regards!
The bank uses debt to income ratios to determine the maximum amount of mortgage payment for which you qualify. The largest DTI percentage is FHA. The maximum for your 'housing ratio' (a/k/a "front end" ratio) is 46.99% of your gross income. If your gross income is $21,000 per year then the maximum monthly payment you qualify for is $822.32 The lender may have more restrictive ratios in their overlays. It is a question you will need to ask your LO so you know for sure.
The housing ratio includes: principal + interest + real estate taxes + homeowners insurance + MIP (Mortgage Insurance Payment) + HOA fee (if applicable). Mortgage Insurance is mandatory for an FHA loan - both UFMIP and monthly.
To answer your question #2: No, the bank does not cover the difference on a more expensive home. You would cover the difference. How that is done is one of the below:
- Increase your down payment until you reach the amount of mortgage for which you qualify
- Find a less expensive property
- Increase your income
- Find a co-borrower to increase the HH income and be on the mortgage. To use the co-borrowers income, that person would have to actually contribute toward the household income. If you have a non-occupant co-borrower their income can not be used to bolster your income.
