Translate:

EN

Debt-to-income Ratio in Cedar Grove Park, SC

Debt-to-income Ratio in Cedar Grove Park, SC

A debt-to-income (DTI) ratio is a tool we use to make sure mortgage borrowers in Cedar Grove Park, SC can afford their mortgage payments, along with their other obligations. It is a good idea to calculate your DTI ratio before you apply for a mortgage, as we have a maximum allowed ratio. Your DTI ratio includes many debts you may not consider when you are deciding how much mortgage you can afford, and it will consider only your gross income.

There are two types of debt-to-income ratios to understand: the front-end ratio and the back-end ratio. Here is what you should know.

Debt to Income in Cedar Grove Park, SC

What is Included in Your DTI Ratio? in Cedar Grove Park, SC

Your DTI ratio will consider only your gross income, which means pre-tax salary, along with other income, such as a pension or rental income. You can determine your gross monthly income by dividing your annual income by 12.

The ratio will include fixed, monthly debt payments that would appear on your credit report, not expenses like utilities, clothing or food.

Debt to Income Ratio in Cedar Grove Park, SC

Your debt-to-income ratio includes:

  • Housing costs in Cedar Grove Park, SC
  • Minimum monthly credit card payments
  • Personal loan payments
  • Alimony or child support
  • Car loan payments
  • Home equity loan payments
  • Student loan payments
Front End Ratios in Cedar Grove Park, SC

What are Front-End and Back-End Ratios?

We in Cedar Grove Park, SC will first look at your front-end ratio, which considers your monthly gross income compared to your proposed PITI payment, or your principal, interest, property taxes and homeowners insurance/mortgage insurance. This ratio will be used to help determine how much you can comfortably pay.

Next, we will look at your back-end ratio, which includes the monthly debt obligations listed above.

Back End Ratio in Cedar Grove Park, SC

What Lenders in Cedar Grove Park, SC Want to See with Your Debt-to-Income Ratio

We in Cedar Grove Park, SC want your front-end ratio to be no more than 28 percent, while your back-end ratio (which includes credit card payments and other debts) should not exceed 36 percent. We may be willing to exceed these limits slightly, if you have excellent credit. If you get a government-backed mortgage, like a VA or FHA loan, guidelines are usually looser. You can have a front-end ratio of up to 29 percent and a back-end ratio of 41 percent with an FHA loan.

For your loan to be considered a Qualified Mortgage under the new mortgage rules of 2014, your DTI ratio cannot be higher than 43 percent.

Qualified Mortgage in Cedar Grove Park, SC

Contact Us Today

3 Ways to Contact Us

2 Ways to Contact Us