topic Re: Income calculation help in Mortgage Loans

Income calculation help

Sassy_Taurus — Thu, 08 Oct 2015 09:54:18 GMT

Hello everyone. Can anyone tell me how lenders calculate income to determine loan amount?

For example if I make $31200 a year from employment plus $9600 child support a year but my tax return only show $28000 employment will they use the $28000? Will they not take into consideration maternity leave or time off for being sick? I was hoping to qualify for $2000k but the calculators all say $135k. If so home buying is out of the question for me unless I find another job.

Re: Income calculation help

cartwrna — Thu, 08 Oct 2015 05:51:00 GMT

Do a calculation of what a payment on a 200k house would be, if putting less than 20% down make sure you add PMI to the monthly payment and homeowners insurance/yearly taxes. Depending on the lender you use they will have a maximum front and and back end DTI. My lenders max back end DTI is 45%. Add all of your monthly payments up ie: loans, minimum credit card payments etc (stuff on your credit), then add in the estimated monthly house payment and divide that number by your monthly gross income, that will be your DTI.

Re: Income calculation help

cartwrna — Thu, 08 Oct 2015 05:53:54 GMT

Principal and interest alone on a 30 year 200k loan at 3.875% rate would be $940. What other monthly debts do you have and I can help you calculate based on DTI what you would qualify for.

Re: Income calculation help

Sassy_Taurus — Thu, 08 Oct 2015 08:50:46 GMT

I have a $452 car note and $50 student loan. I have 2 cc but I pay them off in full before the statement cuts. Both are 300 limits.

Re: Income calculation help

cartwrna — Thu, 08 Oct 2015 10:19:08 GMT

Okay, so using the calculation of your CS and employment I get $3400 a month as your income pre tax. This is how I broke down your loan:

Principal and interest @3.875%=$940
Mortgage insurance for less that 20% down-$141
Homeowners insurance-$85
Taxes-$250
Using those calculations I get a back end DTI ratio of around 56%. Your payment to income DTI is around 42%, that's just on the house which I think may be a deal breaker. I believe they only allow around 32% there.

My estimates are rough, assuming taxes would be around 3k a year and that your homeowners insurance would only run $85 a month, they could be higher.

FHA allows a backend DTI of of 43% I believe, but it can be pushed as high as 60% if you have strong factors such as large down payment etc etc. Some lenders have there own overlays and only allow so much. Also if your score is less than a 620 I believe it has to be manually underwritten but maybe someone can chime in on that. With my calculations your payment would run around $1,415 a month.

Re: Income calculation help

Sassy_Taurus — Thu, 08 Oct 2015 12:58:33 GMT

@cartwrna wrote:
Okay, so using the calculation of your CS and employment I get $3400 a month as your income pre tax. This is how I broke down your loan:

@Principal and interest @3.875%=$940
Mortgage insurance for less that 20% down-$141
Homeowners insurance-$85
Taxes-$250
Using those calculations I get a back end DTI ratio of around 56%. Your payment to income DTI is around 42%, that's just on the house which I think may be a deal breaker. I believe they only allow around 32% there.

My estimates are rough, assuming taxes would be around 3k a year and that your homeowners insurance would only run $85 a month, they could be higher.

FHA allows a backend DTI of of 43% I believe, but it can be pushed as high as 60% if you have strong factors such as large down payment etc etc. Some lenders have there own overlays and only allow so much. Also if your score is less than a 620 I believe it has to be manually underwritten but maybe someone can chime in on that. With my calculations your payment would run around $1,415 a month.

Thank you cartwrna. So with FHAs DTI and my income the calculators are right about 134k loan. I will never find anything in that range here in So Cal. This is hopeless unless I find another job or save for a few more years.

Re: Income calculation help

cartwrna — Thu, 08 Oct 2015 13:05:54 GMT

Hopefully a mortgage banker will chime in shortly, they can help you figure an exact price range.

Re: Income calculation help

cartwrna — Thu, 08 Oct 2015 13:06:25 GMT

I'm in Iowa, so 134k gets you a pretty decent house LOL. 200k and your living good :-p

Re: Income calculation help

Anonymous — Thu, 08 Oct 2015 14:36:41 GMT

I'm in Alabama. $100k will get you a solid 3/1 starter house. $135k will usually get you a nice house. $200k will easily get you a house with a lot of upgrades & either a large lot or a small amount acreage.

Re: Income calculation help

Anonymous — Thu, 08 Oct 2015 14:40:49 GMT

I'm in Nebraska - and looking at a 4/2 house - with a huge yard - that is about $100K even - in Omaha (whohoo the big city)

It all depends on where you are at!

Re: Income calculation help

Sassy_Taurus — Thu, 08 Oct 2015 14:50:04 GMT

You guys are making me want to relocate 😁. I'm currently in Los Angeles and the homes are pricey. I was looking to move about an hour away where I could get a fairly decent home for 200k.

Re: Income calculation help

Anonymous — Thu, 08 Oct 2015 15:27:29 GMT

Where I am, the large national builders buy land just across the USDA eligibility line. They build 1500sqft 3/2 or 2000sqft 4/2 in the $140-180k range. If you but an older ranch style, I've when found some 4/2 for under $90k.

Re: Income calculation help

happy0510 — Thu, 08 Oct 2015 23:29:42 GMT

Oh Sassy! You are not alone!! I am also here is So Cal. I am looking at 600K fixers! But i would never leave. Never ever. Best weather, beaches, mountains, desert, Vegas just down the highway! Mexico for a quick tequila! Don't fret! Lol

Re: Income calculation help

Anonymous — Thu, 08 Oct 2015 23:58:01 GMT

Are you salaried or paid hourly? If you had to take a leave and didn't receive your full salary on last year's tax return, but your current paychecks reflect your full salary amount, you will just need a letter of explanation.