Posted on: 04th May, 2010 04:38 pm
Does anyone know of mortgage lenders currently approving front-end ratios higher than a 28%? Just wondering if we could go a little higher. We are self employed (for 7 years) and have consistent, steady, income that we can document and excellent credit, however our bottom line on our taxes understates our income. I think we could still qualify at about 31% for the front end. Back end ratio would be the same (no debt).
Also, do you know if lenders will still "add back" expenses like depreciation and home office expenses for qualification purposes? And do they require higher down payments from the self-employed if everything else is good. We probably could only do 10% right now
Also, do you know if lenders will still "add back" expenses like depreciation and home office expenses for qualification purposes? And do they require higher down payments from the self-employed if everything else is good. We probably could only do 10% right now
Hi autumn,
If you want to qualify for a conventional loan, then you should have a front end ratio of 28%. You can go for a FHA loan with a 31% front end ratio on your debt to income. As far as down payment is concerned, for FHA loan, you would require 3.5% down payment and for conventional loan, it is 20%. If you are unable to pay 20% down, then the lender will ask you to go for a private mortgage insurance.
Thanks
If you want to qualify for a conventional loan, then you should have a front end ratio of 28%. You can go for a FHA loan with a 31% front end ratio on your debt to income. As far as down payment is concerned, for FHA loan, you would require 3.5% down payment and for conventional loan, it is 20%. If you are unable to pay 20% down, then the lender will ask you to go for a private mortgage insurance.
Thanks
As a consumer, I would suggest doing some mortgage shopping. Your ratio's don't sound like a major issue. You'll find a lender that will approve you conventional or FHA.
