Well how is your credit is the 1st question? Do you have any BK’s or Foreclosures? Do you have enough income is the 2nd question you should ask yourself. Are you putting any money down? Remember 100% financing is more of a risk for the mortgage lender.
Pretty much anyone can get a house, I mean you can get a house before a creditor will give you a credit card with only a $200.00 limit.
Don’t be discouraged or even think i won’t be able to get a house because you recently had a BK…if your BK has been discharged and you don’t have any collections after the BK, most lenders are okay with this. Now of course consumers with B, C, D paper can purchase a home, but the interest rate is going to go through the roof. Now, those A credit buyers can go anywhere…but that is the way above average consumer now a days.
Now, to find out how much you can qualify for…is based on your debt to income ratio…what is a debt to income ratio? How much debt or obligations do you have compared to the income you bring home? Also, your credit places a big role…how many collections do you have, do you have any judgements or liens against you that need to be paid (which they will require you to pay before a lender gives you a loan), and are your student loans in default?
So, now I’ll give you a formula that a good loan officer would use instead of qualifying you for a loan amount with a high interest rate that you won’t be able to afford once you make a couple of mortgage payments…and you property will be up for auction the 1st Tuesday of every month at your local county court house for investors to purchase.
We mortgage professionals calculate a front ratio which is a % of your yearly gross income (before taxes) to go pay your monthly mortgage payment, which should include your principal, interest, taxes, and insurance…often referred to as PITI. 28% is a good rule of thumb to use of your gross income. Now, there are some lenders that will allow you to go as high as 30-40%.
Now you need your back ratio…which is known as your DTI ratio…which i discussed earlier. Most lender does not want this to exceed 36% of your gross montly income.
Now take your monthly gross income, multiple by 0.36 and divide it by 12 this would give you the maximum monthly debt expenses you should not exceed.
Now, that you can calculate yourself how much you can qualify please be smart about the biggest purchase you can make.

STEPH