June 18th, 2018 10:50 AM by Andrew Walter May CEO
Debt to Income Ratio
Your debt to income ratio is simply a way of determining how much money is available for your monthly mortgage payment after all your other recurring debt obligations are met.
There is generally a debt limit associated with each type of loan, such as a 36% qualifying ratio for a conventional mortgage loan. These qualifying ratios are guidelines. An excellent credit history can help you qualify for a mortgage loan even if your debt load is over and above the limit. Call your ADR mortgage professional to select a loan documentation program that is best for you.
Understanding the qualifying ratio
Typically conventional loans have a qualifying ratio that max's out at 38%. Usually an FHA loan will allow for a higher debt load, reflected in a higher (29/41) qualifying ratio. FHA loans are another type of subprime loan and require a significantly higher mortgage insurance charge (similar to the 3.5% x mortgage balance hit you take on a VA loan). YIKES! And you wonder why VA loans even exist? We can get you one if you like, but often times we can eliminate that nasty 3.5% "government benefit". Call your ADR mortgage professional to select the right program for you. We have saved people $7,000 on a VA loan before (on a $200,000 loan). So, don't think all lenders are created equal. We usually win and save you enough to purchase a new 42 inch plasma. So, save some money. Go Green. Go ADR!
Remember these are just guidelines. We’d be happy to pre-qualify you to determine how large a mortgage loan you can afford. We look forward to helping you buy your dream home.