What Is Income For Mortgage Qualification

Debt to income ratio to qualify for a mortgage.

What is income for mortgage qualification. Calculations are made using the current interest rate monthly debt payments and other important variables. Typically there are only two forms of investment income that can be used for mortgage qualification dividends and interest. That s the general rule though they may go to 41 percent or higher for a borrower with good or excellent credit. However what s even more important is how much income you make in proportion to how much the home costs and in proportion to how much debt you have.

As a rule of thumb mortgage lenders don t want to see you spending more than 36 percent of your monthly pre tax income on debt payments or other obligations including the mortgage you are seeking. Front end ratio vs back end ratio. Your income can be proved easily through an employment letter and recent pay stubs. Your income is of course an important criteria in determining whether or not you can afford the mortgage you want.

Having income from a long term salaried position is the easiest way to qualify for a mortgage. Many lenders used to offer what s known as stated income mortgages where all a borrower had to do was state their income and the mortgage would be based on. Use this mortgage income qualification calculator to determine the required income for the amount you want to borrow. Like the income requirements the requirements for a borrower s debt to income ratio or dti are not set in stone according to fannie mae s.