Ideal House vs. Ideal Payment …. Can I have them both?
Originally published: Jun 26, 2012 - 10:29 am
That really seems to be the question. The most important inquiry to resolve is what monthly mortgage payment do you qualify for and what is the best avenue to find out.
When you ask a licensed loan officer they will calculate payment to income ratios that will help you look in the optimal price range for your budget. Fannie Mae and Freddie Mac are agencies that guarantee loans made by mortgage lenders. Using your monthly gross income, their guidelines state that your monthly mortgage payment should not exceed 28%.
Your monthly mortgage payment includes not only your principal and interest, but also your real estate taxes, homeowners insurance and homeowners association dues.
Recurring monthly payments, which consist of a home mortgage, car loans, credit cards and deferred or non- deferred student loans are all used in what is referred as your debt to income ratio. These recurring debts are not to exceed 36% of your monthly gross income.
The Federal Housing Administration, or FHA, is another agency that guarantee loans made by mortgage lenders. The FHA will permit mortgage and debt ratios, if student loan payments are deferred for more than a year, of 31% and 43%.