Posted on: 19th Aug, 2010 05:51 am
What yearly income is acceptable to purchase a single family dwelling of $175,000? Assuming debt to income ratio is ok
Hi Sandra,
It's kinda funny, we can't assume that the debt to income ratio is OK because the amount you can borrow will be based in large part on your debt to income ratio. In order to determine whether or not you would qualify, you would need to list all of your current debts on your credit report, as well as the anticipated home owner's insurance and property taxes in order to calculate what your debt to income ratio.
Here is an easy way to figure out what your debt ratios are.
For the front end ratio, take your proposed mortgage payment (including taxes, insurance, mortgage insurance and HOA dues) and divide that by your gross monthly income.
For the back end ratio take the proposed mortgage payment and add all of the monthly payments for the debts on your credit report and divide that total by your gross monthly income.
In most cases your front end ratio should be around 30% to 40% and the back end you should be 50% or less but some lenders will allow up to 55%.
It's kinda funny, we can't assume that the debt to income ratio is OK because the amount you can borrow will be based in large part on your debt to income ratio. In order to determine whether or not you would qualify, you would need to list all of your current debts on your credit report, as well as the anticipated home owner's insurance and property taxes in order to calculate what your debt to income ratio.
Here is an easy way to figure out what your debt ratios are.
For the front end ratio, take your proposed mortgage payment (including taxes, insurance, mortgage insurance and HOA dues) and divide that by your gross monthly income.
For the back end ratio take the proposed mortgage payment and add all of the monthly payments for the debts on your credit report and divide that total by your gross monthly income.
In most cases your front end ratio should be around 30% to 40% and the back end you should be 50% or less but some lenders will allow up to 55%.