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A simple calculation lets you know in
which price range you should be looking. Your debt-to-income
ratio will determine the highest loan you should apply
for in purchasing your next home. Take into account
two ratios, front end and back end, alongside your monthly
gross salary (before taxes) to calculate your loan amount.
The first, or front-end ratio, has to do with your
housing costs. Add up your “P.I.T.I.” (Principal,
interest, taxes, insurance, and association fees) to
determine your housing costs. Figure out what percentage
of your gross monthly income is applied to your PITI.
The back-end ratio is the percentage of your gross
monthly income used to pay any consumer debt as well
as your PITI. Car loans, credit cards, student loans
and any other monthly revolving and installment loans
are included in this category.
Generally Income-to-debt ratios fall in the 28/36 to
35/41 range. If a debt-to-income’s ratio requirements
are 30/39, a person whose income is $6,000 can apply
$1800 towards the front-end ratio and $2340 toward the
back-end ratio.
A good lender is an invaluable source...View
our list of reccomended Lenders
©1996 By Leonard
Leonard & Associates, Inc. All rights reserved.
Duplication in whole or in part without permission is
prohibited. |
