Question for you mortgage experts

[Doggiedog]

When calculating the debt/income ratio (I think that's right), do mortgage companies use gross or net income? What is the maximum % they use? Is it 65%? What is considered income? Stock dividends? Trading profits? And how do they calculate income? Do they use what you made the previous year? What you currently make? What you've made in the calendar year?

Thanks.

 

[woodie1]

It's been awhile but I think they use gross income. Then it varies as to what is considered income. Interest and dividends are generally okay to list as income but I doubt stock trading income would be.

 

[KenGr]

They can do it either way. The traditional guidelines were to limit loan payment to 25% of gross, 33% of net. However, there are many other factors. All income counts, but counts differently. Ultimately it is the decision of the loan officer as to how to credit "non-standard" factors. All the more reason to get a haircut and clean up your act before you talk to them.

 

[RossMAN]

Usually DSR (debt service ratio) is calculated by taking your total monthly credit obligations (including the new mortgage payment) divided into your gross monthly income.

Depending on your credit score, credit history and the loan amount you could have no stips (stipulations) or they may require 2 years tax returns, 2 years W-2's and last months paystubs.

If your credit score is 660 that's good, 680 is even better, 700+ you're a shoe in probably.

 

[charrison]

Originally posted by: RossMAN
Usually DSR (debt service ratio) is calculated by taking your total monthly credit obligations (including the new mortgage payment) divided into your gross monthly income.

Depending on your credit score, credit history and the loan amount you could have no stips (stipulations) or they may require 2 years tax returns, 2 years W-2's and last months paystubs.

If your credit score is 660 that's good, 680 is even better, 700+ you're a shoe in probably.

at 700 you get in with 0 down.

 

[RossMAN]

Originally posted by: charrison

Originally posted by: RossMAN
Usually DSR (debt service ratio) is calculated by taking your total monthly credit obligations (including the new mortgage payment) divided into your gross monthly income.

Depending on your credit score, credit history and the loan amount you could have no stips (stipulations) or they may require 2 years tax returns, 2 years W-2's and last months paystubs.

If your credit score is 660 that's good, 680 is even better, 700+ you're a shoe in probably.

at 700 you get in with 0 down.

One day I'll have a 700+ credit score, that's a long ways away though

 

[conjur]

I think my credit score is into negative territory...

 

[Doggiedog]

My credit score is 780 and my wife's is 765. So the DSR has to be 25% or less? That is the max amount we can borrow for a house?

 

[RossMAN]

Originally posted by: Doggiedog
My credit score is 780 and my wife's is 765. So the DSR has to be 25% or less? That is the max amount we can borrow for a house?

40% or less is a good % to shoot for.