Thursday April 19, 2018
Personal finances play a large role in home loan pre-approvals. All lenders evaluate your assets, earnings, credit score and existing debts. These determine whether you qualify for a mortgage and for what amount. Below is information on income to debt ratio for Texas mortgage pre-approvals.
It is especially helpful to use Gehan Homes preferred lender. Their team of mortgage professionals will guide you through every step of the mortgage process.
What Is Considered Income
Lenders will calculate your total monthly earnings. This counts only items that may be documented. Earnings from work are the most common source of income. Lenders will ask for documentation (such as W-2 forms) for the previous two years, which gives them a picture of stability. They may inquire about any atypical situations, such as variable figures. Additional types of income can include alimony, investment properties, and stocks. Anything that you wish to use as income must be verifiable. Past earnings and potential for future income is obviously helpful. The amount of documentation needed may differ from one Mortgage Company to another and some exceptions might also apply. It is helpful to tell your loan officer of all possible sources to figure out what can or cannot be used.
Debt describes all continuing expenses such as credit card payments and installment loans. The exact payment amount on loans and other installment debt are used. For adjustable items like credit cards, minimum monthly payments are applied. These figures are normally available on your credit report. Some companies will agree to ignore debts with under one year left or that you may document someone else is obligated to pay it. Payment amounts are totaled to figure out overall monthly obligations.
Information on Income to Debt Ratio For Texas Mortgage Pre-approvals
Lenders compare the monthly income to debt figure out the income to debt ratio, which must fall within a certain level. Additionally, mortgage payments combined with your monthly debt must also not exceed a certain percentage for loan approval. The precise benchmark can vary among lenders and from program to program. Your Gehan Homes preferred lender can give you all the tools you need to determine your ratios.
For example, some companies might require the monthly mortgage payment (principal, interest, land taxes, and home insurance) to remain under 28 percent of the total monthly income. They may also limit your total debt to no higher than 40 percent of combined income. Based on these sample figures, an individual making 60,000 annually (5,000 monthly) may be allowed up to a 1,400 monthly mortgage payment and permitted 2,000 a month for combined debt.
Note that this is only an example and includes only the income versus debt aspect of the financial review that may be performed. There are many other factors, such as credit history and program specific criteria. It is critical to consult with a Gehan Homes preferred lender partner for full details on income to debt ratio for Texas mortgage pre-approvals specific to your particular finances.