Income to Qualify for Mortgage by Frances Burks ; Updated July 27, Potential home buyers should ensure they make enough income to cover more than the monthly payment on a mortgage to qualify for a welovecars.cf://welovecars.cf When you apply for a home loan, the mortgage lender will conduct a thorough review of your income situation. Income is one of the most important factors to a lender, along with your credit score and debt welovecars.cf://welovecars.cf There are no minimum or maximum income requirements for FHA home loans Rules do not say that it’s possible to earn too much to qualify for an FHA loan. Regarding minimums, regulations focus more on the borrower’s ability to afford the mortgage welovecars.cf://welovecars.cf?id=
These days, most lenders set the bar somewhere around 43 to 45 percent for the total debt-to-income ratio, or DTI. This means that if your recurring monthly debts use up more than 45 percent of your monthly income, you might have trouble qualifying for a loan.
On the other hand, a borrower who only uses about 35 percent of her income to cover the monthly debts should be in good shape, as far as lenders are concerned.
These numbers are not set in stone. So, where do you stand? You can find plenty of calculators online to help you calculate your DTI level. The good news is that this process is easier than ever, thanks to the internet. You can apply online and get information sent to you by email. They need concrete evidence of the payments being deposited into your account. Typically lenders will require 12 months of bank statements showing the deposit of the money from your disability income.
If you have the money directly deposited into your account it is easy for the lender to verify the income. Lenders cannot disqualify you from a loan strictly because you are on disability income — which is good news.
The bad news is that you are going to have to jump through quite a few hurdles to get your income used in order to obtain a mortgage. Just claiming that you receive disability income is not going to be enough. Your lender will need to verify this income several ways before using it for qualifying purposes. If you need this income to qualify for your mortgage, make sure to have as much evidence of your eligibility, the receipt of the income and the continuance of the benefits for at least 3 years before applying for the loan.
The more evidence you have prepared for the lender, the easier it will be to get through the loan process. If you are unsure if your disability benefits need to be used, talk to your loan officer about your specific debt-to-income ratio to determine what you need to do to make the loan process as easy as possible. Begin by entering the desired loan amount, expected mortgage rate and length of the loan in the spaces provided.
As you do, you'll notice that the required income and a calculation of the monthly mortgage payment immediately appear in the blue box at the top of the calculator. Note that the loan amount and interest rate can be adjusted by using the sliding indicators; left-click and hold on the green triangles to adjust the figures. As you do, the required income level and monthly mortgage payment will immediately change as well.
The calculator also lets you enter information for monthly debt liabilities and housing expenses, and to view how the required income would vary across a range of interest rates. Don't enter your information for tax payments, homeowner's insurance or other fees billed on your mortgage statement here, though — those are entered under "housing expenses" further down.
This is where you would enter figures for the minimum monthly payments you must make for such things as auto loans, credit cards, student loans, child support and other obligations. Enter the minimum that is required and not any higher amount you might voluntarily make. Enter the same information for your co-borrower, if there is one and the two of you have separate liabilities. Note that these are for debts and other payments you are legally required to make; don't enter such things as utility payments, cable or satellite TV, Internet service or other recurring expenses.
Just as with the loan amount and interest rate, you can adjust these figures using the sliding triangles and the required income and monthly loan payments in the blue box will change immediately. Here is where you enter the additional costs that are typically billed as part of your monthly mortgage payment: Use the worksheet indicated to enter estimates for those figures. You will only need to enter figures for homeowner's association fees if you are planning to buy a condominium, co-op, a home in a planned unit development or similar cooperative arrangement.
You will only need to pay for mortgage insurance if you make a down payment of less than 20 percent of the home's value. Mortgage insurance typically costs 0. This feature shows how the income required for a home loan of a certain amount varies across a range of interest rates. The lowest rate in the table is the one you selected in the calculator. The "View Report" feature will take you to a page summarizing the information you have entered and a table showing the income required for you loan for a range of mortgage rates.
This calculator provides a standard calculation of the income needed to obtain a mortgage of a certain amount based on common industry guidelines. In addition, these guidelines assume that your mortgage payment and other monthly debt obligations combined should not exceed 36 percent of your monthly gross income. Those are the base guidelines; however, borrowers with excellent credit and healthy financial reserves can often exceed those guidelines, going as high as 41 percent of gross monthly income for mortgage payments and debt obligations combined.
You may wish to take that into account when considering your own situation.