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Standard underwriting guidelines that lenders typically use for the Prime Market limit your monthly mortgage payments (including mortgage principal, interest, taxes, and insurance) to no more than 28% of your gross monthly income and your total monthly debts plus your mortgage payment to no more than 36% of your gross monthly income.
For example, if you have a gross monthly income of $6,000 ($72,000 annually), then your monthly mortgage payment should not be greater than $6,000 times 28%, or $1,680.00, and your total monthly debt (including your mortgage payments) should not be greater than $6,000 times 36%, or $2,160.00. If your monthly debt is greater than the difference between these two figures, the monthly mortgage payment you can afford will decrease, as will the loan amount for which you may be qualified.
There are a variety of calculators available to make these calculations for you, but they can only give you an estimate, a general "ball park" figure. We consider these calculators as "toys" and you should not base any decision entirely on the results of a calculator. If you really want the true and accurate answer to your questions, Contact Us.
Ratios used by lenders vary according to the type of mortgage you select, the amount of your down payment, and your credit profile. At Sue Baxter, we can find you a mortgage and at a good rate independent of these quidelines which apply predominately to the conventional loan. With over 300 loan programs, we can help you afford the home of your dreams!
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