What kind of debt is considered acceptable to qualify for pre approval?

Asked by Sue, Manchester, NJ Thu Mar 26, 2009

I have slightly over 50k in credit card debt, but no other debt. I have 20% down payment. I am employed for 27 years and earn in the mid 6 figures. Can I get preapproved for a mortgage of less that 100k?

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Ruth Bonapace, , 07030
Fri Mar 27, 2009
I am a mortgage lender, and based on the information you provided you should qualify for a mortgage well over $100,000 (can't say how much more because you haven't provided your income). To answer your specific question of "what kind of debt is acceptable," it is not your balance but your MINIMUM MONTHLY PAYMENTS that count. A $50,000 car loan with payments of, say, $800 a month, would be count against you more than a $50,000 low interest credit card with a payment of, say, $300 a month. Your total monthly payments for debt -- mortgage, taxes, insurance, and consumer debt, including repayments to a 401k or student loan -- should not be more than 38% of your monthly GROSS income. With good credit you can go to about 42 to 45% and occasionally more but I don't recommend it because you will have little left over to live on. Sounds like you might be a first time buyer. If so, check out my blog and scroll back to the economic stimulus article I wrote with an interactive site that calculates the tax credit you will be eligible for. Go to http://mortgagehelper.tumblr.com
1 vote
Walter Meisl…, Agent, Toms River, NJ
Wed Jun 24, 2009
Hello ! Sue Home Buyer :

You will have to speak to a lendor for a pre-approval . From what you have indicated and the $ 8,000 tax credit you will receive . This is a good to to purchase a home.
Call the following lendor's for pre approval Coldwell Banker Mortgage 732-890-0144 and or Bank of America 732-207-8700 and Ocean First Bank 732-600-3623 .
Hope this will help you with your question. Please advise what type of home you are looking for and location in Manchester . Have a great day. Walter Meislohn
Web Reference:  http://waltermeisloh.com
0 votes
Victor Kamin…, Agent, Edison, NJ
Fri Mar 27, 2009
Mid 6 figures guessing $500K with 20% down you shouldn't have a problem qualifying for more.

Why are you worried about the credit card debt, you should pay it down if your making that much. It's seems strange that you would be worried about qualifying for $100K in that income bracket with only $50K debts provided that is the only debt you have (no other mortgages?). Banks consider DTI aka Debt to Income ratios and monthly payments factor in as well and of course the other BIGGY, your credit scores from the big three agencies pick the one in the middle, no averaging or calculating and that is the score mortgage companies will use.

Payment history, bankruptcies, foreclosures, repos and other factors can also play a role in getting approved for a mortgage but with your income unless something HUGELY negative shows up you should sail through underwriting with most lenders.

Is this an investment property? I'm scratching my head if this is meant to be a primary residence because most folks earning that much money will be buying a home more then $100K especially in New Jersey with the prices of homes here.

PS. if you'd like some help from an agent, please do call we have agents in the area.
0 votes
Dani Padovano, Agent, Mt Laurel, NJ
Thu Mar 26, 2009
The best thing to do is talk to a mortgage broker as the others have said - only they can tell you realistically if you qualify. Make sure you go with someone that has bee refered to you as a reliable mortgage person. If you need a good referal I can give you one. Feel free to contact me for the info.
Dani Padovano
0 votes
Keith Sorem, Agent, Glendale, CA
Thu Mar 26, 2009
There are a number of factors that affect your buying power. i would echo the previous poster. Talk with a lender, They should be able to determine the approximate purchase price for which you would qualify.

Your purchasing power is based on your FICO score, assets, liabilities, and work history. A general rule of thumb is that your mortgage payment, property taxes, and insurance cannot exceed roughly 34-36% of your monthly income.

Based on your unsecured debt a loan officer might recommend ways to plan ahead for a purchase.
0 votes
Pamela El-Gh…, Agent, Manalapan, NJ
Thu Mar 26, 2009
Hello Sue,
Please reach out to a mortgage broker or even a bank and they will be able to determine this for you. I am sure some mortgage brokers will also respond shortly to this question for you. Usually there is no charge for a pre-approval. Good luck and if you have any questions, I can be reached by email or cell phone.

Best Regards
Pamela El-Ghoul
Weichert Realtors/Howell
Office Number: 732-577-0440
Cell Number: 732-236-9608
0 votes
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