Rental Basics in Las Vegas>Question Details

Alifer, Home Owner in Las Vegas, NV

HOW DOES THE LENDER DECIDE THE MAXIMUM LOAN AMOUNT THAT CAN AFFORD?

Asked by Alifer, Las Vegas, NV Thu Mar 7, 2013

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Rena (Rina) Levy’s answer
BEST ANSWER
Lenders look at the gross monthly income and monthly debts like car payments, credit card, personal/student loans, child support and etc. Its called Loan to Value .

Depending on the type of loan applied, for instance owner occupied FHA loan,FHA loan requirements include a maximum debt to income ratio. When a borrower applies for an FHA mortgage, they are required to disclose all debts, open lines of credit, and all possible approved sources of regular income. Using this data, the bank and the FHA calculate the borrower's debt-to-income ratio.

How much can that ratio be? According to the FHA official site, "The FHA allows you to use 29% of your income towards housing costs and 41% towards housing expenses and other long-term debt."

Those percentages should be examined side-by-side with the debt-to-income requirements of a conventional home loan. In many cases the borrower gets only 28% of the income to put toward housing, and 36% of the income to put towards housing expenses and other debts.

Example:
1) MORTGAGE PAYMENT EXPENSE TO EFFECTIVE INCOME

Add up the total mortgage payment (principal and interest, escrow deposits for taxes, hazard insurance, mortgage insurance premium, homeowners' dues, etc.). Then, take that amount and divide it by the gross monthly income. The maximum ratio to qualify is 31%. See the following example:


Total amount of new house payment: $750

Borrower's gross monthly income (including spouse, if married): $2,850

Divide total house payment by gross monthly income: $750/$2,850

Debt to income ratio: 26.32%


2) TOTAL FIXED PAYMENT TO EFFECTIVE INCOME

Add up the total mortgage payment (principal and interest, escrow deposits for taxes, hazard insurance, mortgage insurance premium, homeowners' dues, etc.) and all recurring monthly revolving and installment debt (car loans, personal loans, student loans, credit cards, etc.). Then, take that amount and divide it by the gross monthly income. The maximum ratio to qualify is 43%. See the following example:


Total amount of new house payment: $750

Total amount of monthly recurring debt: $400

Total amount of monthly debt: $1,150

Borrower's gross monthly income (including spouse, if married): $2,850

Divide total monthly debt by gross monthly income: $1,150/$2,850

Debt to income ratio: 40.35%

If you need to qualify for a loan contact me at 702-612-7099 or email at rena@cvegashomes.com

Rena Levy
Broker/Associate
Certified Intentional Property Specialist
702-900-4330
Rena @cvegashomes.com
Web Reference: http://www.cvegashomes.com
0 votes Thank Flag Link Sat Mar 9, 2013
Some of the criteria include financial stability, debt-to-equity ratio and the credit history...
0 votes Thank Flag Link Thu Mar 7, 2013
0 votes Thank Flag Link Thu Mar 7, 2013
I am NOT a lender however they often use whatever you GROSS income is and take 50% of that income and then MINUS out all your set bills that are lines of credit such as credit card minimums and car payements and school loans etc.... That amount left over is the $$$ you are allowed to spend on the mortgage + hoa + taxes + insurance payment.
And of course credit and income matter
I am NOT a lender this is a very very basic rundown.

Call me anytime because I use some great lenders and as well I am great at helping find homes and MOST importantly getting your offers accepted ( which is hard to do now-a-days )
0 votes Thank Flag Link Thu Mar 7, 2013
Each lender has their own criteria. But in general, they look up your credit score and history. To back that up, they all ask for 2-3 weeks of current pay stubs and 2 years of tax returns and present debt payments. They just want to make sure you are in a position to repay the loan. The maximum amount they will give you is based on your earnings and history.
Once you get A PRE-APPROVAL LETTER , then CALL ME AND i GO TO WORK TO FIND AND GET YOU A HOME
0 votes Thank Flag Link Thu Mar 7, 2013
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