Yearly Income For Mortgage Approval

Typically lenders cap the mortgage at 28 percent of your monthly income.

Yearly income for mortgage approval. However borrowers with excellent credit and healthy financial reserves can often exceed those guidelines going as high as 41 percent of gross monthly income for mortgage payments and debt obligations combined. For example say year one the business income is 80 000 and year two 83 000. But the lender also looks at something else when reviewing years one and two. Determining what is an affordable mortgage generally speaking most prospective homeowners can afford to finance a property that costs between two and two and a half times their annual gross.

Those are the base guidelines. To determine your front end ratio multiply your annual income by 0 28 then divide that total by 12 for your maximum monthly mortgage payment. Buying a larger mortgage than you can truly afford is a good way to end up house poor. While you may be approved for a 500 000 mortgage based on strong credit and a solid income for example paying 3 000 for a mortgage each month may not be realistic if you have substantial student loans or other debts you re paying off.

The income used for qualifying purposes is 80 000 83 000 163 000 then divided by 24 6 791 per month. This rule says that your mortgage payment which includes property taxes and homeowners insurance should be no more than 28 of your pre tax income and your total debt including your mortgage and other debts such as car or student loan payments should be no more than 36 of your pre tax income. That s a 120 000 to 150 000 mortgage at 60 000. For base pay bonus pay and commission income equaling less than 25 percent of the borrower s total annual employment income a completed request for verification of employment form 1005 or a.