When purchasing a home it’s essential that a mortgage loan originator determine if you can afford to make the payments on that home over the long term. During the frenzied run up to the mortgage melt down loans were made based on unrealistic debt to income ratios among other devious schemes to qualify a borrower at any cost. With the new rules going into place today a borrower’s total monthly payments for all loans must be less than 43% of their gross income. Here is an easy way to calculate how much income is needed to qualify for a loan.
First, what qualifies as income is only what can be documented and substantiated. If you’re paid under the table for a side job that’s not income. If you can’t back up claims about commission payments, that’s not income. Only what shows on your pay stub or can be substantiated with multiple years of tax returns.
