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How much mortgage do I qualify for?


How big of a mortgage can I qualify for?

3490 day(s) ago

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Mr. Boxy
This is a complicated question.

First, you need to determine if you qualify for any type of loan. Generally, banks will expect you to show two years of steady or increasing income, and have have no delinquent payments on your credit report for more than two months in a row. Your credit score will also determine if you qualify for a loan. A score 620 or below is considered subprime, while 720 and higher is excellent.

The bank will also factor in other liabilities like car loans and child support to figure out how much you can pay per month. You can get a basic estimate here:
http://www.mortgage-net.com/calculators/qualifynow.html

In most cases, the bank will only approve a loan if the monthly payment is no more than 1/3 of your net income.

Rates are based around conforming loans: These are loans that meet the terms of government-sponsored enterprises (GSEs.) As they are semi-government backed, they are considered more secure and come with a lower interest rate. Remember when Fannie Mae was bailed out a couple years ago? It was a GSE. Loans with a principal above this limit are called jumbo loans. They don't carry this guarantee, so they have much higher interest rates.

VA and FHA loans are calculated area to area based on local housing prices, using a combination of high-cost and regional estimates. "High-cost" areas are those that have much higher than normal real estate prices, especially places outside the continental U.S. like Puerto Rico and Alaska.

You can find the loan limits for FHA here:
https://entp.hud.gov/idapp/html/hicostlook.cfm

VA loan limits by area can be found here:
http://www.valoans.com/va_facts_limits.cfm

Posted 3490 day ago

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