Step1: Calculate Housing Ratio
Lenders use two ratios
to approve the amount
they will lend you:
housing
ratio
debt-to-income
ratio
The "housing ratio"
is calculated by dividing
monthly housing expenses
by your gross monthly
income. The housing ratio
should not exceed 28%.
Monthly housing expenses
includes real estate taxes,
insurance, etc. If you
don't have your real estate
tax or insurance figures,
the American
Housing Survey shows
that the median taxes
paid averaged $12 per
$1,000 in home value (divided
by 12 months). The property
insurance paid averaged
$30 per month.
You may contact your local
community and county officials
to determine your true
county and city tax factor: www.statelocalgov.net
Private Mortgage Insurance
(PMI) will be required
if your down payment
is less than 20% of
the home purchase price.
Your PMI monthly cost
will average 0.005 of
the borrowed amount
divided by 12.
If you fail to pass
either ratio, you may
need to adjust your loan
request to bring your
ratios within approved
parameter
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