There are two ratio that we looked at, 1st is the housing ratio or other name top ratio. this is your Mortage payments, including property tax per month and hazard insurance & mortgage insurance combine divided by your total gross income if it's 31% or less then your ok.
2nd is your DTI or Debt-to-income ratio, which is the top ratio plus your total monthly debts payment per month divided by your gross income. if your ratio is 43% or less then you will be ok. However, if you go beyond that, you can go up to 50% but you have to have compensating factors like, high credit score, enough money for reserves, stable job.
If you still have problems, contact me, so I can talk to you in regards to your situation.
The loan process shouldn't be a difficult process for anyone. When applying for a loan, the broker will pull credit, look at job history, income, debt and stability of the person(s) applying for the loan. If the debt to income level is too high, you will not qualify in today's market. Sometimes paying off a debt with cash will bring the debt ratio to appropriate levels for financing guidelines. This happens all the time. However, if the first lender could not underwrite the loan that is a cause for concern and perhaps there is a problem with the ratios and/or credit.
If all ratios are correct and the credit score high enough, and there are no late payments in the past 24 months for an FHA loan, or 12 months for a VA loan there shouldn't be a problem obtaining a loan from a reputable lender. Not all credit lates will stop one from buying a home, especially if they are medically related, as a letter of explaination (LOE) will be required and will need to be signed off on by the lender's underwriter.
Never sign anything you don't understand ever. Why would you?
The process though me or any other lender should be:
1. You fill out an application and get pre-qualified and then run your credit, if it appears you qualifiy, with your broker and supply him/her with your last two paystubs, last 2 years income taxes w/ W-2's and last 3 months bank statements including all pages i.e. if page one says, page 1 of 3, you must supply all three even if the last page is blank.
2. Broker submits loan package to various lenders for approval. Here some questions may arise and need to be explained further before loan approval is granted. When granted, you will know what price range you may now begin looking for in a home.
3. Approval granted and now you give your pre-approval letter to Real Estate Realtor/agent and begin looking for homes that you're qualified to buy.
4. You will find a home, submit an offer with your pre-approval letter and then once an offer is accepted you are on your way and will begin the inspection process to ensure that you are getting a worthy home.
If I or anyone here can be of further assistance, contact them and they would be happy to answer your questions as that is what we're all here for...to assist you...this is what we do!
Great question and thank you for the opportunity to explain the process to you Avery. Best of luck!