05-18-2013 11:21 AM
Long time lurker and first time poster. I would like the thoughts of this great community if my info below would qualify for a new build. I was looking to finance a $162,000 purchase.
My middle score is 670.
Income: $60,000-$70,000 (3+ years with the same company as a 1099 employee. However, I have set up an S corporation for direct deposit. I pay myself 40% each month of the direct deposit each month so I can pay my social security and personal tax each month)
Extra Income: $8,000/yr (steady for 10+ years) child support
Debts: 2 credit cards with 4% total util; $445.00/mo car loan (car loan is paid through my S corporation)
Thank you for your input.
05-18-2013 02:31 PM - edited 05-18-2013 02:31 PM
Based on my experience (I'm shopping for a house right now), with a mid-60's income and looking for a $175k house, the loan officer told me that my DTI ratio was well within tolerance (tax rate on the property is around 3%), so you are likely easily within range. You can generally expect that your payment (with PMI, homeowner's insurance, and escrow) should be at or less than 28%-33% of your pay, with your total payments (including auto and cards) being less than 36-38% of your pay. My numbers may be slightly off, though, but that's basically what I've been told (if I remember correctly =).
05-18-2013 02:51 PM
Thank you for the reply. I'm concerned if they will ask if I own a business since I receive my 1099 pay check every month through my S corporation bank account and I just pay myself using quickbooks to calculate my federal income tax and social security I need to pay every month. I don't pay myself the entire payroll check, just about 40% and the rest stays under the corporation's bank account. I don't own a business per say, but I'm a 1099 contractor under my own corporation.