To figure out if you can afford a
new home or not, complete this calculator. It is a quick way to determine
your total financial circumstances and outlook. Both your mortgage company and
your lender will use these mortgage ratios to determine both your income and
your debt. This calculator calculates three ratios called the Housing Ratio
,
the Loan-to-Value (LTV) Ratio ,
and the Debt Ratio .
Instructions:
Note, all fields are required, enter zero (0) for items which do not apply.
In the general terms, banks look at the ratios in this way. These are
averages only, each bank may differ on the exact ratio's they use to qualify a
mortgage.
LTV (Loan to Value): 80% or less, good. 81% or higher and generally you must
have mortgage (PMI) Insurance.
Housing Ratio: 28% = conventional mortgage / 29% to 31% = FHA mortgage
/ 32%+ = sub prime mortgage (higher rate)
Debt Ratio: 38% = Conventional mortgage / 39% to 41% = FHA
mortgage / 42%+ sub prime mortgage (higher rate
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