Home
Mortgage : Mortgage Prequalification : Affordability
Lenders
decide on affordability of the monthly mortgage
by estimating through through
two
ratios:
housing
ratio and debt ratio.
Housing ratio is
determined by your total monthly mortgage payment divided
by your total monthly income.
Debt ratio is determined
by the sum of your total monthly mortgage payment and
other fixed monthly debt payments divided by your total
monthly income.
If these
ratios are too high, lenders may decide to deny the application.
However, today, you can get by with much higher percentages,
if you can show that you can make the payment.
