| Many people wonder if they can really afford to fulfill | | | | payments,etc.) Guidelines may be flexible or vary with |
| their dream of owning their own home, or how much | | | | different types of mortgages such as FHA & VA |
| of a home they could afford. They wonder what a | | | | (veterans) mortgages. |
| lender will look at in deciding how much of a mortgage | | | | 2. Lenders will only count income that can be |
| they can get. If this is what you are asking, here are a | | | | documented on paper. This is based on your gross |
| few things to consider: | | | | income before taxes. One shortcut way to calculate |
| 1. First, a lender will look at how much of your monthly | | | | your monthly income is to add the last two years |
| income before taxes is going into paying off debts. | | | | income on your W2's and divide by 24 (for 24 |
| Frequently, they will use the 33/38 ratio. This sounds | | | | months). This should give you a fairly good idea of |
| confusing but let me break it up simply: 33% of your | | | | what your monthly income is. If you are receiving 1099 |
| income can go into housing costs (mortgage, insurance, | | | | income or are self-employed, you will need tax returns |
| taxes, etc) and 38% of your income can go into your | | | | from two years to document what you are earning. |
| regular consumer debts (loans, credit cards, car | | | | |