Qualifying Income For Mortgage Loan

If a mix of social security or pension payments plus other monthly income gives you enough dollars each month to fall under that 43 percent threshold you have as good a chance as anyone of qualifying for a mortgage loan assuming that your credit score and other factors are solid.

Qualifying income for mortgage loan. What the prequalification letter states is that loan approval is likely based on credit history and income. Some loan programs place more emphasis on the back end ratio than the front end ratio. Mortgage loan preapproval and loan prequalification. Typically lenders cap the mortgage at 28 percent of your monthly income.

To determine your front end ratio multiply your annual income by 0 28 then divide that total by 12 for your maximum monthly mortgage payment. The information below is to serve as a guide to how the mortgage industry views. Income for mortgage loan qualification is important in the calculation of debt to income ratios how lenders underwriter income and liabilities factors such as income credit assets debt and liabilities together with income are all important factors when qualifying borrowers for mortgage loans. As a rule of thumb mortgage lenders don t want to see you spending more than 36 percent of your monthly pre tax income on debt payments or other obligations.

The most challenging part of qualifying for home loan is determining the qualifying income because of the myriad of business industries ownership structures and compensation methods. But the lender also looks at something else when reviewing years one and two. That s the percentage of your total debt payments as a share of your pre tax income. For example say year one the business income is 80 000 and year two 83 000.

Credit income and assets. Your debt to income ratio or dti determines how much home you qualify for and it all hinges on how the lender calculates your qualifying income. Debt to income ratio to qualify for a mortgage. Assuming you have good credit and assets to buy a home the most important factor in qualifying for a home loan is your debt to income ratio.

The income used for qualifying purposes is 80 000 83 000 163 000 then divided by 24 6 791 per month. The example above showed. To see if you qualify for a loan mortgage lenders look at your debt to income ratio or dti.