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I don't know what the guy told you, but 50K income and a 290K house seems WAY high. My wife made 73K with zero debt and could get up to about 320K so that is 50% more income and no debt. Granted rates were a tad higher then. On top of that, from what I understand, you have to be able to qualify for the new mortgage along with maintaining the old one. The only difference is that they may allow the "income" from the property to count as income.
So, at 50K per year you would be looking at 4200 per month income. Add in the 1750 in rent and you are at 5950.
Standard DTI limits are around 43% total debt (although they may allow you higher if you have some extra cash reserves ans since you have 700 scores....)
That means that you have roughly 2600 for monthly debts. Now, you already have $1982 in debt.
It sounds like the LO added all the income and subtracted the car payment and based the figures on that. The problem is that you still have the first mortgage. Again, even allowing the 1750 as income, that only puts you at just under 6K in monthly income. Assuming that due to high Fico and other factors they allow you to go up to 50% DTI (7% or so over standard guidelines) you would still only have about 3000 for total monthly debt. Subtract out the first mortgage and car payment and you have about a grand left. That leaves you enough room to finance up to maybe 125K or so depending upon tax rates, etc. And, that assumes that they will both approve higher DTI and count the rental income without prior tax records of it (which is often required).
VA’s debt-to-income ratio is a ratio of total monthly debt payments (housing expense, installment debts, and so on) to gross monthly income. It is a guide and, as an underwriting factor, it is secondary to the residual income. It should not automatically trigger approval or rejection of a loan. Instead, consider the ratio in conjunction with all other credit factors.
A ratio greater than 41 percent requires close scrutiny unless:
the ratio is greater than 41 percent solely due to the existence of tax-free income (Put notation regarding the tax-free income in the loan file or calculate an adjusted, smaller ratio based on “grossing up” of the tax-free income.), or
residual income exceeds the guideline by at least 20 percent.
VA Loan
-Fico Score 620 or above.
-Income wise they dont really based it on salary, but lenders will balance the debt on the credit report and monthly expenses.
-On your other house loan did you use VA Loan? If so you have to pay it off with zero balance, or else VA would just deny it.
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