Look at Yourself Like a Lender

What do they look for?

Two Numbers Rule
This is what lenders look for...

Generally speaking, a lender will look at two numbers in deciding how much you can afford:

• Your monthly housing costs (including mortgage payment, taxes, and insurance) and,
  
  
• Your total debt, including monthly housing costs plus your long-term debts (student loan, car loan, credit cards or other installment debt).

The guideline is you should spend no more than 28% of your monthly gross income (before taxes) on housing expense. That can include business income, disability or retirement benefits, alimony, child support, etc. In addition, your total monthly debt payment, including housing and other long-term debts, should be no higher than 36% of your monthly gross income.

Chart the Numbers

Print out this chart and fill it in to understand how a lender evaluates you for a mortgage.

Are You Ready to Crunch the Numbers Now? Here is your opportunity.

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