All government, conventional and jumbo loan program guidelines require that the borrower have the ability to repay the loan. Income qualification is one of the five main home loan qualifying factors.
Underwriters, who work for lenders as the decision makers when it comes to approving or denying loan applications will calculate debt-to-income ratios on each loan request to determine the borrower's ability to repay.
The calculations are simple. The top ratio is the housing expense ratio and is the total amount of Principal, Interest, Property Taxes and Homeowner's Insurance (expressed on a monthly basis) divided by the borrower's gross monthly income. The bottom ratio is this amount plus all other recurring monthly debt obligations divided by the borrower's gross monthly income.
The standard percentage or bottom ratio is 41%. Some of our new Flexible Loan Programs have expanded guidelines and allow the bottom debt-to-income ratio to be as high as 55%, meaning it would take less income to qualify.
Posted by: Brian Bush
Brian and his team have been funding real estate loans for over 23 years.
Since 1991, they have funded over 1 Billion Dollars in loans.
You can reach Brian at 800-607-1941 x220 or bbush@slglends.com .
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