Mortgages and Debt-to-income ratios

Mortgage Debt-to-income ratiosTo find out your maximum mortgage amount, lenders use a guide principle called debt-to-income ratios. 

In simply English this is the percentage of your monthly income which is used to get your debts cancelled every month. 

There are two types of calculations, there is a "front ratio” and a "back ratio”. 

They are usually written as follows: 33/38.

The front ratio is the percentage of your monthly gross income. It is used to pay your housing costs, interest, taxes, insurance, and some other issues if applicable.  The back ratio includes your monthly consumer debt. 

Your consumer debt can be related to credit card debt, electronics payments or whatever you have bought and need to be paid. 

As explained above, a regular guideline for debt-to-income ratios is 33/38.  This means that a borrower 's home costs consume 33 percent of his  monthly income.  Adding his monthly consumer debt to the home costs which it shouldn’t exceed 38 percent of his monthly income to convene the pertinent requirements.

However, these guidelines are just guidelines and may be flexible. If you are determined to make a small down payment or if you have insignificant credit, the guidelines will be more strict.

If you plan to make a big down payment or you have an excellent credit, these guidelines will be less strict.

Guidelines can be different and it depends on the type of loan program you have selected to buy a home.

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