Qualifying Ratios Help

This calculator is useful to estimate what the banks will be looking for when you apply for a home loan. There are certain percentage ratios of your debt to your income which you need to fall into in order to qualify. Also, the last calculated field shows the monthly income you would need to qualify for a home with the Sale Price you have entered (given the other monthly debt you will also be asked to enter). Thus you can estimate a realistic price range of Homes you should look at, but filling in your pre-existing debt and income and varying the Sale Price you enter.

How to use this calculator.... Enter values by tabbing between fields. You can change all, some or none of the default values in the Variable Fields column before pressing the Calculate button.

Field Descriptions

Sale Price of Home: The price which you anticipate paying for your home.
Percent (%) or $ Amount Down: Home purchasers typically put between 10 and 20 % down on a home purchase. To enter a dollar amount instead of a percentage, enter the dollar amount and then select the second button by clicking in it.
Term of Loan: A home loan is typically given for a period of years such as 30.
Interest Rate: The interest rate you anticipate contracting for when you take out your home loan.
Combined Hshld Mthly Gross Income: Enter your combined household monthly gross income.
Auto Loan: Enter the monthly payment (if any) for your car. If you don't have any, enter 0.
Other Recurring Payments: Enter any other monthly payments (or regular payments which you can break down into monthly payments). If you have none, enter 0.

Dollar Amount Financed: The amount you will actually be taking a loan out for. This is based on the Sale Price of the house less the percentage or dollar amount you will put down at the time of purchase.
Monthly Payment: Simply monthly mortgage payment based on above information.
Annual Loan Cost: Calculated from same information as the Monthly payment (Sale Price, Money Down, Loan Term and Interest Rate), but multiplied by 12 to get the yearly cost.
Other Debt: The total of debt other than your new home (taken from combining the Auto and Other fields).
Total Monthly Debt: Adds the new home monthly debt to your pre-existing debt to show your new monthly debt.

RATIO OF HOUSING COST TO INCOME: Dividing your monthly mortgate cost by your monthly income, we get this ratio, which should be <=28% for conventional loans.
RATIO OF (HOUSING COST + DEBT) TO INCOME: Dividing your monthly mortgate cost plus your current debt by your monthly income, we get this ratio, which should be <=36% for conventional loans.
MINIMUM MONTHLY INCOME NEEDED TO QUALIFY: Taking into account your current and mortgage debt, this is the income your household would need to have to qualify for a loan on this house.