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How much income do you need for a home loan?

How much income does a borrower need to qualify for a home mortgage loan? A borrower's monthly debt must be approximately 45% of their monthly income. To qualify for a mortgage, a borrower must pass two debt tests: 1. Housing Debt - The housing cost must equal approximately 40% of the borrower's monthly income. a. The housing cost = Mortgage, Taxes, and Insurance b. If the housing cost $4,000, income should be approximately $10,000. c. $4,000 is 40% of $10,000. 2. Total Debt - The housing cost is added to all consumer/credit card debt. The total debt must be approximately 45% of the borrower's monthly income. a. If the total debt is $4,500, income should be approximately $10,000. b. $4,500 is 45% of $10,000. 3. To calculate the borrower's debt ratio, divide the debt by the income. a. If the monthly housing cost is $3,200 and the monthly income is $6,500, divide $3,200 by $6,500. This would yield a housing debt of 49%. b. In this instance, the housing cost is too high to qualify. Information provided by Paul Cawthorne,
Loan Officer
NMLS # 249035
Prospect Mortgage
A Direct Lender
Phone: 310-499-8128
Fax: 877-809-7969
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.
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