Best Mortgage Amount for You

"Your lender will help you determine the amount of mortgage that you need to apply for. The best way to determine how much house that you can afford is by looking at your debt-to-income ratio. Lenders look at two parts of your debt-to-income ratio. The first part is your housing expense ratio. This is simply taking your proposed house payment and dividing it by your monthly gross income. Lenders like see this figure at no more than 28%. The second part of your debt-to-income ratio is your total debt ratio. That is simply your monthly total debts and divided by your gross monthly income. Lenders typically like this figure to be 36% or less. There are exceptions to these ratios. Government guaranteed loans, who are backed by government agencies, typically will be more lenient with these ratios. Also, if you have strong credit, a lot of times, lenders will take a higher ratio."