Posted on: 12th Feb, 2008 03:28 pm
I would like to know calculating what % of my income should a person spend on a monthly
morgage.
morgage.
Hi Jerome,
Welcome to the forum.
I think you should not spend more than 36% of your monthly income for your monthly mortgage payments as you have other expenses too.
Best of luck,
Larry
Welcome to the forum.
I think you should not spend more than 36% of your monthly income for your monthly mortgage payments as you have other expenses too.
Best of luck,
Larry
Me and my wife make around 95,000 a year but our home is getting too small for our family, we found a better home for over 250,000. I need to know calculation of our income should a person spend on a monthly morgage.
Hi Jerome,
There is more than one answer to your question. Different loans allow for different ratios of debt of income. FHA allows for 42%, Community homebuyer programs allow for up to 41% (generally), and conforming loans allow for up to 36%. All of this is relative, however, to the amount of savings and assets you have.
Generally speaking, Like Larry said, if you keep you house payment, all of the minimum pymts on your credit cards, and all of your loan payments under 36%, you are golden.
The best thing you could do is get together with a good loan officer and have them prequalify you. But you are wise to think about this beforehand, because there are people in our industry that will do their best to push your qualifying ability...so go into the meeting with an idea of what YOU KNOW you can afford, then make sure you can qualify for it, and then you are ready to go find your home!
There is more than one answer to your question. Different loans allow for different ratios of debt of income. FHA allows for 42%, Community homebuyer programs allow for up to 41% (generally), and conforming loans allow for up to 36%. All of this is relative, however, to the amount of savings and assets you have.
Generally speaking, Like Larry said, if you keep you house payment, all of the minimum pymts on your credit cards, and all of your loan payments under 36%, you are golden.
The best thing you could do is get together with a good loan officer and have them prequalify you. But you are wise to think about this beforehand, because there are people in our industry that will do their best to push your qualifying ability...so go into the meeting with an idea of what YOU KNOW you can afford, then make sure you can qualify for it, and then you are ready to go find your home!
Jerome let me correct some of the information that has been posted.....First and foremost....it's not just the mortgage debt.....it's the total monthly debt.....
FHA allows for a 43% TOTAL debt ratio.....but will approve higher debt ratios through the automated underwriting engine.....if however you can' get an automated approval then 43% is the max....For conforming loans......the underwriting engine will actually approve up to a 65% debt ratio.......
So really I have a cpl of questions......what is your other monthly debt right now......ie credit cards,auto.and other loans......excluding your current mortgage.........and what kind of payment are you comfortable making.
FHA allows for a 43% TOTAL debt ratio.....but will approve higher debt ratios through the automated underwriting engine.....if however you can' get an automated approval then 43% is the max....For conforming loans......the underwriting engine will actually approve up to a 65% debt ratio.......
So really I have a cpl of questions......what is your other monthly debt right now......ie credit cards,auto.and other loans......excluding your current mortgage.........and what kind of payment are you comfortable making.
cedric is right on again. of course, your individual situation is most relevant, jerome. as he mentioned, how much you have in other monthly obligations is a key to the entire ratio question.
at $250000 sales price, assuming that you have a down payment, your $95K would seem to fit; but of course, you aren't thinking of what might fit. you want to know the standard guideline.
back in the day, it was 28% of gross income. we may be coming back to "back in the day" with what has been going on in this economy of late. at any rate, the 35-36% of gross income is a pretty reasonable guideline to use - that would put your maximum monthly outlay for housing in the neighborhood of $2800 - all-inclusive of taxes, homeowners insurance and principal and interest on the loan (condo fee, if any, also) and mortgage insurance, if any.
this is the "conservative" method - at least for these modern times.
at $250000 sales price, assuming that you have a down payment, your $95K would seem to fit; but of course, you aren't thinking of what might fit. you want to know the standard guideline.
back in the day, it was 28% of gross income. we may be coming back to "back in the day" with what has been going on in this economy of late. at any rate, the 35-36% of gross income is a pretty reasonable guideline to use - that would put your maximum monthly outlay for housing in the neighborhood of $2800 - all-inclusive of taxes, homeowners insurance and principal and interest on the loan (condo fee, if any, also) and mortgage insurance, if any.
this is the "conservative" method - at least for these modern times.
