The Importance of Understanding Your Income
It’s important to ask yourself, “how much can my income support?”
A loan officer looks at two things when they take your application:
- Your front end ratio. This is the percentage of your gross income devoted to housing expenses – minus utilities.
- Your total debt-to-income ratio. These are debts you pay on a regular basis (credit cards, car payments, – items that show up on a credit report). The higher this ratio, the tighter your budget becomes.
Generally, your front end ratio should not exceed 25% of your total income and your total debt-to-income ratio should be kept at 43% or below although, these are not hard rules.
As always, your lender will provide important specifics. Always voice any concerns you may have. We’ll have you ready and knowing just how good it is to be home.