how much you can afford

[danohio2831]

i have read were it says 28% of monthlyincom is the amount of loan you can get. can someone confirm this?

thanks dan

[BassBoy]

28% of income is what I remember. Additionally, I recall all other debts (i.e. car loan, credit card), along with the mortgage, should be no more than 36% of monthly income.

[FilingOnMyOwn]

Some lenders will go 36%, 40%, or even 50%. All depends on the risk the lender is willing to take and the local housing market. Its not unrealistic that if someone could even afford to buy a house in southern california that they would have to spend over half of what they make on a mortgage. Another thing now tho is the 'quick & easy' loans. If you have 10% down and a credit score over 700, thats all that matters, you can buy anything you want.

[Bobby'sGirl]

Net or gross income??

Would you look at your take-home pay after taxes or your salary?

[FilingOnMyOwn]

Gross

[BassBoy]

No one should push it pass the 40% mark. If you figure you pay about 30% to Uncle Sam and have 40% of debt, that sure doesn't leave you with much left over.

And yes, we're talking gross income here.

[tradewiz50]

Another thing now tho is the 'quick & easy' loans. If you have 10% down and a credit score over 700, thats all that matters, you can buy anything you want.

I did a "no doc" loan for my home purchase back in 2004. My FICOS then were 697, 681 and 668. Alll that was required was an appraisal, and 5% down. The median score had to be over 660 to qualify.

[MTG_BANKER_OH]

i have read were it says 28% of monthlyincom is the amount of loan you can get. can someone confirm this?

thanks dan

It all depends on what the lenders guidelines are you can get mortages approved with overall debt ratios of 64%, I do not recomend that anyone do this but it all depends on credit history and the lenders guidelines. I think it is easier to get a home loan then many other types of loans. The guideline that FHA likes to stick to is your house at 31% of your gross income and your overall debt to 41% of your gross income. This is a rough rule for FHA and loans can get approved with higher ratios. Most conforming loans are run through an automated system and the system approves the loans, it is all dependent on what the computer system says whether you will get approved. They take into consideration income, assets( big one), pay history, job time, etc..