Christian Community Mortgage Resource Network
Long Term Debt
Whether you may already have a certain house in mind or not, you need to know how much you can qualify to borrow. That will depend on several factors such as total current income, current car loan, credit and other payments and other long-standing debts.
Generally, mortgage loan underwriting standards will allow you to take on long-term debt that totals no more than 36 percent of your monthly income.
Monthly income is calculated as the gross amount on your paycheck (what you see before deductions such as taxes, FICA, health insurance premiums and other expenses).
Long-term debt is anything that takes more than 10 months to pay off such as: credit card debt, auto loans, student loans, current mortgage, property taxes and homeowners insurance.
The less debt you have going into the home-buying process, the better. The smartest thing to do is pay off the debts as fast as possible even if it means you can't save toward the down payment until later.
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