Financing in 91101>Question Details

Brian Tran, Home Buyer in Los Angeles, CA

What is the rule of thumb on monthly mortgage to net income?

Asked by Brian Tran, Los Angeles, CA Tue Jun 5, 2012

I remember it was between 25-30%, does this still apply when asking for a loan?

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robert chomentowski’s answer
The more important figure used by lenders is GROSS income to Total debt ratio (total debt is house payment + car loans + student loans + credit cards, etc..). FHA will go to a max of 55% DTI and conventional generally about 50% with 20% down, 45% with less than 20% down.
1 vote Thank Flag Link Tue Jun 5, 2012
Excellent! Thank you!
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To be on the safe side, your monthly mortgage payment should not exceed 28% of your gross income (individual's total personal income before taking taxes or deductions).
This calculation includes more than just the base price of the house. Consider, for example, a $50,000 gross income. Based on 28% of that amount, the mortgage payment would be $14,000 per year or $1,166.66 per month. That $1,166.66 needs to cover all four potential components of a mortgage: principal, interest, taxes and insurance (PITI). Note, this is just an example; you will need to speak to a financial professional to get the correct numbers.
Shop around and try to get the best deal – some real estate office will offer “in house lending” – use this as your last option. Remember, it is your money -research different options. Good luck!
0 votes Thank Flag Link Tue Jun 5, 2012
Brian the range can go as high as 35% and will depend on the lender and loan program. I suggest you speak with an experienced loan broker to determine best scenario for you. I can certainly match you with one or more of my trusted financing experts to help you. Just let me know.
1 vote Thank Flag Link Tue Jun 5, 2012
There are several factors to consider and a simple 25% of your income is not enough. Some people have a lot of monthly debt (auto loans, credit cards or student loans) others do not. Lenders look at debt to Income and typically like to see the total monthly debt to income be below 45-50% after factoring in your morghage payment.
0 votes Thank Flag Link Sun Aug 25, 2013
Well I am a bit late to answer this question but for the benefit of someone else reading this

Actually we look at the gross income and can go as much as 55% but we include the payments on all of the debt. Most of the better programs only go to 45%
0 votes Thank Flag Link Thu Aug 15, 2013
Agreed it is monthly payment to gross income.

With excellent credit you can go as high as a 50% debt to income ratio (with FHA).
Conventional lending is pulling back a bit to 45%. This is even with 20% down payment.

Although there are lending sources who state they will go higher, there may be nuances to your loan that may not pass those limitations.

You should definitely have your case anlayzed by a mortgage professional. If you are really serioius, you should have your loan preapproved with a reputable lender!

Good luck to you!!
0 votes Thank Flag Link Tue Jun 5, 2012
Hi Brian. It's really important to speak with a financial professional. There are actually a variety of different loan products out there each with their own parameters for debt to income. If you are looking to buy I would be happy to help you with the process. I have a lender on my team that is very helpful whom I happily refer all of my clients to and consistently get positive feedback for. Please don't hesitate to reach out with any specific questions or requests.

Sincerely,

James Stevens
Re/Max Tri-City
(818) 636-9394
Email: james@jlsrealestate.net
0 votes Thank Flag Link Tue Jun 5, 2012
Hi Brian, My name is Emily Ramirez I am a Realtor with Re/max Top Producers in the city of Diamond Bar. I live in South Pasadena and service all of Los Angeles County area with a specliazation in the San Gabriel Valley and Foothill Comunities.

For an FHA loan product its aproximatly 46/57 It is a front and back end ratio, the 47% is where the bank wants to see you with out a mortgage and the 57% is where the bank needs you to be with a Mortgage. I hope that's helpful? Best way Brian is to go out and get pre-gualified dont be scared there is no obligation and at the very least you know excatly where you stand and can prepare more if need be..

Best Regards,
Feel free to call me directly or email
Emily Ramirez
Re/Max top Producers
DRE# 01846017
(626)498-6659
Emsuperagentla@yahoo.com
0 votes Thank Flag Link Tue Jun 5, 2012
Hi Brian, My name is Emily Ramirez I am a Realtor with Re/max Top Producers in the city of Diamond Bar. I live in South Pasadena and service all of Los Angeles County area with a specliazation in the San Gabriel Valley and Foothill Comunities.

For an FHA loan product its aproximatly 46/57 It is a front and back end ratio, the 47% is where the bank wants to see you with out a mortgage and the 57% is where the bank needs you to be with a Mortgage. I hope that's helpful? Best way Brian is to go out and get pre-gualified dont be scared there is no obligation and at the very least you know excatly where you stand and can prepare more if need be..

Best Regards,
Feel free to call me directly or email
Emily Ramirez
Re/Max top Producers
DRE# 01846017
(626)498-6659
Emsuperagentla@yahoo.com
0 votes Thank Flag Link Tue Jun 5, 2012
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