Home Loan Amount
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Home Loan Amount
Posted by joeytiger on 8/6 at 2:50 pm
Is there a formula or guidelines to determine how much you can be approved for with regards to purchasing a home without going through the bank? I am just curious to know how much my wife and I would be approved for if we decided to move.


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Posted by Ace Midnight on 8/6 at 2:59 pm to joeytiger
quote:

Is there a formula or guidelines to determine how much you can be approved for with regards to purchasing a home without going through the bank? I am just curious to know how much my wife and I would be approved for if we decided to move.


It varies fairly widely from lender to lender, plus your situation of income stability, debt-to-income ratio, total monthly debt service, overall credit worthiness.

Your basic rule of thumb is between 20 to 25% of your gross income is your max payment - although somewhat more aggressively, it can got to about 30%. However, I would use 25% and, personally, I would choose a 15 year mortgage. That is the smartest way to go about it, from purely financial considerations. Structure your downpayment and ultimate budget around those numbers.




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Posted by KG6 on 8/6 at 3:15 pm to Ace Midnight
quote:

Your basic rule of thumb is between 20 to 25% of your gross income is your max payment


That's a pretty big percentage, at least if you are just starting off like me. If you go by my gross income, my house note is just under 10%. But the wife and I have student loans, and all the other things that newly weds have to take care of so it doesn't feel like we can spend much more than that.



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Posted by HeadyMurphey on 8/6 at 3:21 pm to joeytiger
Sounds like a bad idea to see what you are approved for. I think should should figure out what you can afford and then see if you can get approved.


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Posted by joeytiger on 8/6 at 3:29 pm to HeadyMurphey
Not looking just yet, but will be in the next year or two. My wife and I have great credit and low debt and really only want a house between 200,000 - 275,000. I would love to find a big home that needs some work and completely renovate it and put in a pool. I guess I will just hold off until the time comes.


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Posted by hawkeye007 on 8/6 at 3:32 pm to joeytiger
i will give you some advice, wait until your ready then get pre-approved. also we have a saying in the mortgage world..build and pool leave a pool..in other words make sure this is the last home you own before you spend money on a pool because it does nothing for your home value


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Posted by wegotdatwood on 8/6 at 3:39 pm to joeytiger
I think the max they will do is 41%.


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Posted by mglsu21 on 8/6 at 3:41 pm to wegotdatwood
quote:

I think the max they will do is 41%.


That's for debt-to-income.

Payment to income is generally 25-30% max. Personally I like using 15% to be very conservative.


This post was edited on 8/6 at 3:42 pm

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Posted by BayouBengal on 8/6 at 3:57 pm to Ace Midnight
quote:

Your basic rule of thumb is between 20 to 25% of your gross income is your max payment


Is that for just P&I or inclusive of property tax, HOA and insurance?



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Posted by Powerman on 8/6 at 3:59 pm to BayouBengal
Inclusive of everything in your note

Lenders usually look at your other monthly credit obligations (if you have credit cards, vehicle loans, or other) to determine what you are eligible for. At least that's what mint told me



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Posted by Paul Allen on 8/6 at 4:09 pm to Powerman
What if you have a vehicle loan but your company reimburses you for the note monthly?


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Posted by mglsu21 on 8/6 at 4:58 pm to Paul Allen
quote:

What if you have a vehicle loan but your company reimburses you for the note monthly?


Pretty sure that the reimbursed amount counts as income while the loan counts as a monthly debt. Do not think it is just an even wash where neither one is counted.



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