Home Buying in Boston>Question Details

Adalina_mend…, Renter in Jamaica Plain, MA

I am a self employed and I want to buy a house, anyone knows what's the minimum agi that I must have in my taxes for a home loan of $150k ?

Asked by Adalina_mendez, Jamaica Plain, MA Sat Nov 17, 2012

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Hi Adalina,
I am going to attempt this by using some randomly picked numbers. When lender qualify you they use two calculated income to debt ratios. The first is the housing ratio which is you mortgage payment plus association fees if you are buying a condo divided by your 24 month average income. Lenders will use the last two years averag income not just last years.

The second ratio is your total debt ratio which is your housing expenses above plus all your other financial obilgations which include your car payment, student loans, and the minimum payments required by your credit card companies. It could also include child support or alimony payments.

So lets pick some numbers to use. Lets say that you are going with a 30 year fixed 3.5% FHA loan that requires monthly mortgage insurance. I am using $ 850 per month for you rP&I and MIP costs. Lets also include $ 200 for taxes and another $ 75 for home insurance. This adds up to a monthly housing expense of about $1125. If we use an acceptable lender housing ratio of 33%, then you will need to have an average gross income of $ 3400 per month.

The typical total debt ratio for an FHA program will go to 45%.I have seen it allowed to go up as high as 50%. This means that with the same $ 3400 per month AGI, you can carry up to $ 405 of other monthly obligations and still make it work.

Have you heard about FHA 203K loans and why they may be the best way for you to purchase a home? Call me if you want to know more.
1 vote Thank Flag Link Sat Nov 17, 2012
AGI is not the only criteria.
Debt, credit, assets, loan to value of the property you want to buy, etc.
I would ask a local real estate lender.
They can also help you plan a future purchase if it isn't currently possible.



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0 votes Thank Flag Link Mon Nov 19, 2012
I believe you have to prove a minimum of 2 years. As far as how much money you need I would consult a mortgage broker.
0 votes Thank Flag Link Mon Nov 19, 2012
You make what you make adjusting those numbers so they make it possible to qualify will not make it any easier to pay the mortgage. Report your income accurately and buy what you can afford.
0 votes Thank Flag Link Sat Nov 17, 2012
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