How Much of of a Mortgage Can I Get?

12 Replies

What income is counted for a mortgage? 

And how much could I get? 

Say, if our income is $300 a month?

Or $2,000?

Thank you!

Typically, your mtg pmt including property and taxes, can’t be more than 35-45% of your monthly income, before income taxes. Add any other monthly debt pmts and your total monthly payments can’t be more than 45-50% of your monthly income.

@Jenna Goldstein   Income that is stable and predictable and likely to continue is typically counted as qualifying income for a mortgage.  What does this mean?  Lenders want to see a minimum 2 year employment history, preferably in the same job or line of work.  If you are paid a salary as an employee with no overtime, your income calculations will be more straightforward.  If your income is made up of bonuses, overtime, or commission income they will need to average that income over a 2 year period.  If you are self employed or own rental property your tax returns will need to be reviewed with all schedules to determine qualifying income.

You will be able to use a certain percentage of pre-tax income, which varies depending on which type of loan is best for you. Conventional loans will allow up to 50% debt to income ratio, FHA and VA can be a bit higher. Down payment, credit history, occupancy and property type will play a role in which type of loan you choose.

The other half of the debt to income ratio that will affect how much you can qualify for is your expenses, or more specifically, your monthly minimum debt payments including credit card minimums, car payments, student loan minimums, and any other installment loans that you are obligated to pay.  How much you spend on things like car insurance or your cell phone is not counted.

If you have specific questions on your own income and expenses that you'd like to go over, feel free to PM me. 

Originally posted by @Wayne Brooks :

Typically, your mtg pmt including property and taxes, can’t be more than 35-45% of your monthly income, before income taxes. Add any other monthly debt pmts and your total monthly payments can’t be more than 45-50% of your monthly income.

 Does that mean there is no limit to the mortgage amount? 

Originally posted by @Stephanie Irto :

@Jenna Goldstein  Income that is stable and predictable and likely to continue is typically counted as qualifying income for a mortgage.  What does this mean?  Lenders want to see a minimum 2 year employment history, preferably in the same job or line of work.  If you are paid a salary as an employee with no overtime, your income calculations will be more straightforward.  If your income is made up of bonuses, overtime, or commission income they will need to average that income over a 2 year period.  If you are self employed or own rental property your tax returns will need to be reviewed with all schedules to determine qualifying income.

You will be able to use a certain percentage of pre-tax income, which varies depending on which type of loan is best for you. Conventional loans will allow up to 50% debt to income ratio, FHA and VA can be a bit higher. Down payment, credit history, occupancy and property type will play a role in which type of loan you choose.

The other half of the debt to income ratio that will affect how much you can qualify for is your expenses, or more specifically, your monthly minimum debt payments including credit card minimums, car payments, student loan minimums, and any other installment loans that you are obligated to pay.  How much you spend on things like car insurance or your cell phone is not counted.

If you have specific questions on your own income and expenses that you'd like to go over, feel free to PM me. 

 Well that is good to hear that there is no limit. I never thought that we could get a  $500,000 house with an income of $300 a month. 

But isn't it discrimination to force me to work?

@Jenna Goldstein No, you can't get a $500,000 house with $300/mo income, you didn't comprehend the answers very well. 50% of $300/mo is $150.  The loan payment, not including property tax and insurance, on $500k is about $2500/mo.......kinda tough to afford on $300/mo income.

no one is forcing you to work, but you can't force them to lend you any money either, that you couldn't possibly pay back.

But, to answer your original question directly: with $300/mo income you can not get any mtg whatsoever.  For higher incomes, use the math stated twice above.  And FYI the loan payment(Principle and Interest), excluding property tax and insurance, is about $500/mo per $100,000 borrowed.  So, on  $200k loan the P&I payment is about $1,000/mo., plus taxes and insurance.  So, if taxes and insurance  are another $300/mo., the total mtg payment would be $800/mo which means you would need about $1,600-2000/mo income if you had no additional debt payments (total monthly payments can be no more than 40-50% of income)..

Updated 3 months ago

Sorry, just having my first coffee: the $800/mo total pmt would be on a $100k mtg (500 plus 300). On $299k, it would be $1000 plus 300=1300/mo which means you'd need about $2600-3300/mo income, with no other debtpayments.

Originally posted by @Wayne Brooks :

@Jenna GoldsteinNo, you can't get a $500,000 house with $300/mo income, you didn't comprehend the answers very well. 50% of $300/mo is $150.  The loan payment, not including property tax and insurance, on $500k is about $2500/mo.......kinda tough to afford on $300/mo income.

no one is forcing you to work, but you can't force them to lend you any money either, that you couldn't possibly pay back.

But, to answer your original question directly: with $300/mo income you can not get any mtg whatsoever.  For higher incomes, use the math stated twice above.  And FYI the loan payment(Principle and Interest), excluding property tax and insurance, is about $500/mo per $100,000 borrowed.  So, on  $200k loan the P&I payment is about $1,000/mo., plus taxes and insurance.  So, if taxes and insurance  are another $300/mo., the total mtg payment would be $800/mo which means you would need about $1,600-2000/mo income if you had no additional debt payments (total monthly payments can be no more than 40-50% of income)..

 Wow. It is complicated. I am trying to figure it all out.

But what income is counted?

For example, we receive SNAP. It is $1,000 a month for food. Not a liquid asset. 

We also receive Medicaid. Again, not a liquid asset. Yet as I understand it, it is the equivalent of about $1,000 a month if we paid it outright. 

Then we have TANF, which is only $600 a month, but would be $1,400 if we moved. This is a cash benefit. 


The reason why I question it, is becasue California is unique in it's rental laws. You need 3 times your income to rent there. And we do not have that in liquid assets. But MANY real estate agents have told me things like "You need money for food and health insurance!" I explained to them that we HAVE food and health insurance ALREADY! That is what the SNAP and Medicaid/MediCal is. But they said that does not count. How does it not count? "You can't pay your rent with food stamps!" That is not what that portion of the equation is supposed to be allotted for though. If one needs resources for food and health insurance, why should it matter where that comes from? What if my rich dad paid for us? Would that mean we were any worse off?

I am wondering how it works with a mortgage, if it is the same? 

Will all incomes, we can easily calculate a monthly income of say, about $3,500.

That should open the door quite a lot to a higher mortgage, no?

But are they like California rental agents? Only count liquid assets?

 Underwriters  only count liquid income that is verified to continue for at least 3 years into the future. Anything like SNAP, food stamps, or anything like that is not allowable income. 

Kathy Argento, Lender in CA (#357025)

    Originally posted by @Jenna Goldstein :

    But isn't it discrimination to force me to work?

    This is such a golden post. 

    Originally posted by @Kathy Argento :

     Underwriters  only count liquid income that is verified to continue for at least 3 years into the future. Anything like SNAP, food stamps, or anything like that is not allowable income. 

     Why? I never understood why you need money for food and health care, if you already have it! That is not logic.

    Originally posted by @William Walker :
    Originally posted by @Jenna Goldstein:

    But isn't it discrimination to force me to work?

    This is such a golden post. 

     Thank you!

    You can’t expect to get a loan if all your money comes from the government. Why else would the rest of us work if we could just get everything for nothing?

    @Brandon Heimsoth @Jenna Goldstein   True, but the lenders want to see that the money will be continued.  Now if you were on permanent disability, SSI, or retirement (pension or similar), that's is usually for life, so that would be allowable and acceptable.

    Kathy Argento, Lender in CA (#357025)

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