Name that mortgage where you can include repairs and improvements in the loan. 203k! Good, now name another one. Is there one? Yes, under some circumstances home repairs and improvements can be included in the loan amount under the UDSA loan program. The main requirement that is needed is an appraisal higher in value than the sales price. Buying a home for 200k and the appraisal is at 205k, it is possible to include 5k worth of improvements in your loan. Questions about USDA loans click here.
How expensive of a house can you buy? One of the most common questions that buyers ask.
The monthly payment method: The monthly payment of the home is calculated using principle and interest payments, taxes, insurance, mortgage insurance, and home owner dues. This figure determines your front end ratio.
The back end ratio is calculated by taking the front end ratio and adding: credit card, child support or alimony, car, and other installment payments.
There is no established maximum for the front ratio but most lenders would like it to be under 30% of your gross monthly income.
The back end ratio maximum is 45% for some programs. This is dependent on factors as credit score and cash reserves.
Remember this will establish your maximum mortgage payment and not the recommended monthly payment. A single person with a debt ratio of 40% is a different situation than a family of 5 with a debt ratio of 40%. Remember, in most circumstances the bank will approve you for a larger mortgage than you will be comfortable paying. Be smart and take into account your own personal position and make a good decision. A Realtor and Lender can provide you with the information to make the right decision for you.
Making good decisions about what road to take can save you commute time. Chick here for a guide to Seattle traffic.
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