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Contributor
Posts: 80
Registered: ‎01-15-2008
0

Is being approved for 3 times annual income standard?

We just tried to get pre-approved through Wells Fargo as I felt our current LO wasn't being very responsive with our questions.  I'm not sure if the LO from WF actually ran all of our information but he called me back to say that the rule of thumb is to approve mortgages for only 3 times the family's annual income.  Since I've had a slow month at work he used this month to calculate our yearly income, putting as at $51k/year, so we would approve for only $153k through them.  My prior pre-approval from the other bank was $225k with me making a little bit more money, but there was no way they assumed we were making $75k.  The paystubs I gave her would have put us at $59k/year.

 

So was the LO from Wells Fargo wrong in telling me we'd only get approved for $153k? (Which wouldn't even buy as a mobile home where we live)   Our only monthly debts are a $200 car payment and $60 student loan.

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3/27/09 Mortgage Application:
Me: EQ 691 EX 659 TU 714
DH: EQ 670 EX 677 TU 702
Established Contributor
Posts: 721
Registered: ‎03-15-2008
0

Re: Is being approved for 3 times annual income standard?

I was prequalified for $200K on a salary of $51K.  That included monthly debt payments of around $200-$250.  Now that's just prequal and it was only 1 bank, so I can't even compare, that's just what I've experienced.
4/16/09: TU: 775, EQ: 805
2/11/09: TU: 773, EQ: 790, EX:790
11/16/08: TU: 773, EQ: 785, EX: 780
Goals for 2009: 0 Credit Card Debt & 0% Util (achieved 2/6/09), Mortgage! (achieved 11/2/09), getting closer to 800 scores (I crossed this earlier this year, but I'm sure I'm not there anymore!)
Contributor
Posts: 103
Registered: ‎10-04-2007
0

Re: Is being approved for 3 times annual income standard?

[ Edited ]
i've heard that if you have a comparable amount of debt to your salary you should GENERALLY be able to afford atleast 3 times your annual salary, but that doesn't mean you wouldn't qualify for more....
Message Edited by MsDonesha on 04-29-2009 08:33 AM
Established Contributor
Posts: 703
Registered: ‎03-23-2009
0

Re: Is being approved for 3 times annual income standard?

It's really hard to say.  Taxes and HOA dues will play a big part in this.  In my area taxes are pretty low so I would be able to qualify for a higher loan amount.  The best way to find out is to calculate this yourself so you have a better idea of what payment you are looking at and how much your DTI and housing ratio would be.  It is also going to make a difference on what loan product you are going with.  USDA has no monthly MI where FHA has MIP and conventional with less than 20% down has PMI.
Goal: 700 by end of January!!! 7/20/09 EQ 605
6/03/09 EQ 587
5/15/09 Ex 686 TU 653
5/11/09 EQ 628/ TU 639/ EX 656 (81% util.)
5/9/09 EQ 628/TU ?/ Exp ?
3/23/09 EQ 491/ TU 565/ Ex 627
Senior Contributor
Posts: 3,494
Registered: ‎05-25-2008
0

Re: Is being approved for 3 times annual income standard?

DH makes $92K/year (I make bits here and there doing freelance graphics) and we were approved for up to $350K -- they said they'd be able to go as high as $400K, but advised against it.

Our debts are roughly:
$100-200/month minimums on 7 CCs
$200/month student loan
$200/month car note - since we only had 3 more payments, this wasn't included in the DTI

 

Property taxes roughly $2100/year

Homeowner's insurance roughly $2100-2900/year.

 

We ended up with $216K. 

 

So, I think that roughly translates to about 4 times his salary. :/

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Hubby's FICOs when we started: high 400s (June 2008)
Hubby's FICO NOW (04/06/09): TU: 679 EQ: 608 EX: ???
My FICOs: TU: 643, EQ: 606
Closed on new home: 1/20/2009 -- If we can do it, YOU can do it!!

Established Member
Posts: 15
Registered: ‎04-03-2009
0

Re: Is being approved for 3 times annual income standard?

I don't know what's standard, but we were pre-approved for an amount far above 3 times our annual income.  It was actually a bit over 4 times our income...an amount we would never be comfortable spending.
Valued Member
Posts: 43
Registered: ‎03-11-2009
0

Re: Is being approved for 3 times annual income standard?

The Mrs. and I make about $95k/yr and we were approved for $380k, our ratios were tight and we had to pass manual UW, but it all came together. Our LO said she could approve us up to $420k, but she would have to count my non taxable perdiem into my salary and we would have been squeaking by even with that.
Contributor
Posts: 87
Registered: ‎01-03-2009
0

Re: Is being approved for 3 times annual income standard?

 

Wonderin - How did you get your husband's score up from 400 in less than a year? What worked for you?

Working on buying our first home!
10/15/2012 TU 680 EX 658 EQ 684
06/26/2009 TU 644 EX 601(fako) EQ 614
06/06/2009 TU 612 EX 526 (fako) EQ 614
05/01/2009 TU 594 EX ???? EQ 563
01/01/2009 TU 527 EX 453 (fako) EQ 477
Senior Contributor
Posts: 3,494
Registered: ‎05-25-2008
0

Re: Is being approved for 3 times annual income standard?


getting2work wrote:

 

Wonderin - How did you get your husband's score up from 400 in less than a year? What worked for you?




Obsessively spending every waking hour in the Rebuilding Your Credit forum!!

In the end, I sent out roughly 40 GWs (oodles to the same companies -- since persistence is key), somewhere like 10 DVs, and 8 (?) PFDs -- all CMRRR.

I was the biggest PITA for every single one of our creditors/CAs. Smiley Happy

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Hubby's FICOs when we started: high 400s (June 2008)
Hubby's FICO NOW (04/06/09): TU: 679 EQ: 608 EX: ???
My FICOs: TU: 643, EQ: 606
Closed on new home: 1/20/2009 -- If we can do it, YOU can do it!!

Valued Contributor
Posts: 1,060
Registered: ‎02-13-2008
0

Re: Is being approved for 3 times annual income standard?

Do you have high property taxes?

 

I make $50K, was approved for $180,000 assuming 5.5% and $4,500 for taxes...

 

My final loan amount I went with was $154,100 (after $8K as my down payment).

 

Make sure you can afford your mortgage and still afford to have a life!


Good Luck!!!

Mortgage Lenders Mid-Score 778 I AM A HOMEOWNER!!!!! 30 Year 5% Fixed Rate, closed on 3/18/09

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