Important Notice: Our web hosting provider recently started charging us for additional visits, which was unexpected. In response, we're seeking donations. Depending on the situation, we may explore different monetization options for our Community and Expert Contributors. It's crucial to provide more returns for their expertise and offer more Expert Validated Answers or AI Validated Answers. Learn more about our hosting issue here.

What is involved to be pre-qualified for a mortgage loan?

April 26, 2017involved mortgage loan pre-qualified

0

Posted

What is involved to be pre-qualified for a mortgage loan?

1 Answer

0

Posted

Prequalifying for a loan is the process of determining how much money you will be eligible to borrow before the application for a loan. The factors that are used to determine the maximum mortgage you can afford are income and existing debt. On a conventional mortgage, a debt-service ratio of 28/36 is the guideline used to make the determination. Here’s how it works: The total monthly housing cost, which includes the principal, interest, taxes and homeowner’s insurance should not exceed 28% of your total gross monthly income. The total monthly debts (including the above housing costs) should not exceed 36% of your monthly gross income. There are some programs available which allow for higher ratios – specifically VA, FHA and some First Time Home Buyer programs. It is important to note that “prequalifying” for a loan does not mean that you are approved for a loan. It simply helps you determine what is affordable for you.