topic question on qualification for conventional loans - dti, etc. in Mortgage Loans

question on qualification for conventional loans - dti, etc.

Anonymous — Fri, 04 Mar 2011 15:22:03 GMT

My long term girlfriend and I are looking to purchase a home together in NC in the next year - here is a rough breakdown of our status - we want to make (and have) a 10% downpayment, both have excellent credit (760+), reserves in 401k's (~$50,000). She will be keeping her house and not selling it until after we purchase the new one. Both have been in same field for 5+ years, excellent job stability, etc. Our combined gross income is ~$11,100/month, current monthly recurring debt (car, credit, student loan, her mortgage including taxes, insurance) is $1500. I estimate the taxes, insurance will be approx $350/month on the new house and PMI on the new house being ~$150/month. SO - the bottom line is our total expenses including taxes and insurance on the new home as well as her current mtg and all our recurring debt is ~$2000/month.

question - i am trying to figure what we will qualify for - my estimate utilizing the back end ratio of 36% is a mortgage of $350,000 on a 30year fixed at 5.5% and with a 10% down payment the max purchase price being ~$390,000 - does this sound right?

also - is 36% the max back end ratio on a conventional given our good credit, etc???

Thanks for any input

Re: question on qualification for conventional loans - dti, etc.

Anonymous — Fri, 04 Mar 2011 15:41:31 GMT

Here are some mortgage calculators:

http://www.mortgagecalculator.org/
http://www.bankrate.com/calculators/mortgages/mortgage-loan.aspx
http://cgi.money.cnn.com/tools/houseafford/houseafford.html

The last one is probably the most helpful for your question - I'd include her mortgage in the monthly debt section.

Re: question on qualification for conventional loans - dti, etc.

cdtotten — Fri, 04 Mar 2011 16:24:45 GMT

Until you have a signed contract on her home, you will have to include her monthly mortgage payment if you buying the new home together. There will most likely be a clause as well that you cannot close until her home is closed, unless you can afford the new home including her mortgage payment.

Re: question on qualification for conventional loans - dti, etc.

ShanetheMortgageMan — Mon, 07 Mar 2011 00:52:02 GMT

Lenders will permit up to a 45% debt ratio with conventional financing, if you have 20% down then some will go up to 49.99%.

Due to the conforming loan limit, your max sales price would be $463k, as 10% down would leave you leftover with a $416,700 loan amount. Your debt ratio would be about 42.82% in that situation.