Quick question about how preapproval works

[ireland381]

The short question... If you're just getting a preapproval, how do you decide how much to ask for, and what happens if you qualify for more or less than that? Do you have to reapply for a specific amount?

To explain a bit more... I thought the idea of preapproval was to see how much you could potentially borrow, so when our application asked for a specific amount, I didn't know whether I should shoot high and risk instant denial, or shoot low but then be limiting ourselves to less than we might have been approved for?

My husband and I applied online at BECU for a mortgage preapproval, and we may not be ready yet, but we're kind of clueless as to how close we are. So it was mostly to get a solid credit picture and see if we qualified at all. In terms of many factors (credit, income, employment history, etc.) I feel like things could go either way. The biggest factor is we're not sure if they'll count my income, so there could easily be a 100K swing in how much we qualify for.

I suppose all of this could have been answered had we done it in person! But with a 6 month old and us both working all the time, we figured we'd give the online process a shot, so there it is. I've tried to contact our loan officer via email, but she basically said she's backlogged with apps and she'd get back to me "soon."

[webhopper]

What sort of income do you have?  Do you claim it on your taxes?  If so, then it counts if you've claimed it for the last two yrs.

I would use a basic mortgage calculator and see how much you qualify for with just his income. That'll give you a good place to start. I never recommend for people to start making offers on houses that push their DTI limits to the max....  unless you're comfortable being house poor. Just my preference

[ireland381]

Here's what I posted a few days ago with the details: http://ficoforums.myfico.com/t5/Mortgage-Loans/Chance-at-an-FHA-loan/m-p/1477110#M98975

But in short, I work part time so I don't make a lot, only about $12K/year, yes it's on my taxes, but my concern was I've only worked a year in my current job. Before that, I was unemployed for about 6 months, and my previous job (same industry) was about 16 months.

I think the calculators are what's confused us so much! Depending on which ones I've used, they seem to give really different outcomes, even with all the same info.

I also noticed on our application (after it was submitted) that they seemed to estimate taxes, insurance etc. pretty high... their estimate for total home expenses put as well above the 28% of income mark, and (mostly based on calculators), we had thought it would be lower.

But mostly want to know is... we put in a $250K purchase price amount with $25K down, so more or less financing $225K... do they generally just say yes or no for that amount, or would they come back and say, "You're not approved for $225 but we can lend you $200K" or conversely, "We can loan you up to $300K"... ha not likely, but just curious about how that works.