How much does the “Bank” say I can afford?
For the answer, know your taxable income along with the amount of any debt outstanding along with the minimum monthly payments. Assuming it is your principal residence you are purchasing, calculate 35% of your income for use toward a mortgage payment, property taxes and heating costs. If applicable, half of the estimated monthly condominium maintenance fees will also be included. Make sure to include the one-time high ratio insurance premium onto the mortgage amount. Then, calculate 42-44% of your taxable income and deduct all monthly debt payments, including car loans, credit cards and lines of credit payments. The lesser of the first or second calculation will be used to help determine how much of your income can be used towards housing costs including your mortgage payment. *** NOTE*** qualifying mortgage rate today for high ratio mortgages is the benchmark figure of 4.89%
How will the child and spousal support I pay affect my chances of qualifying?
When child and/or spousal support are paid by you the amount paid out is included with your other monthly debt obligations such as car loan, credit cards or lines of credit when qualifying. However, there are still some lenders who will instead deduct these monthly amounts from your income before qualifying you. Under this 2nd scenario, you can qualify for a higher mortgage amount.
What is the minimum down payment required?
A minimum down payment of 5% is required to purchase an owner- occupied home whether you are a 1st time homebuyer or buying for the 3rd time. The amount of 20% is required for the purchase of a rental property. In addition to the down payment, you must also prove to the lender that you have additional funds to cover the applicable closing costs (i.e. legal fees and disbursements, and any property tax adjustments).
Yes, again, whether you are a 1st time homebuyer or not, you can borrow the down payment, though be aware you will then not only have to qualify for the mortgage but also the down payment loan or line of credit payment too. Most lenders will require the down payment for the purchase of a rental property has to come from your own resources
Before all of the mortgage rule changes, you could simply phone any lender and ask them their best mortgage rate. The answer was the same for just about everyone who asked. Now, before quoting a rate, the lenders need to know whether the home will be owner occupied or a rental, how much the purchase price is and your down payment amount, your credit score and are you buying, renewing or refinancing? The rates are the lowest for buyers putting down less than 20% and the mortgage has to be insured. The next best rate is for buyers putting down 20% or more who can qualify over 25 years and at the benchmark rate of 4.89% (government set qualifying rate at October 1,2017). The rates can be quite a bit higher for those with at least 20% down who are refinancing, buying rental properties, amortizing over 30 years or cannot qualify at the benchmark rate.
If your question has not been answered above, why not contact the MortgageGirl and ask -er. She is a former banker turned Mortgage Broker with over 35 years of experience. Call her at – 780-433-8412 or email – firstname.lastname@example.org. She can also be followed on Facebook, Twitter or her blog.