How big of a FHA Loan Can I afford?
Your monthly costs should not exceed 29% of your gross monthly income for a FHA Loan. Total housing costs often lumped together are referred to as PITI.
P = Principal
I = Interest
T = Taxes
I = Insurance
Examples:
Monthly Income x .29 = Maximum PITI
$3,000 x .29 = $870 Maximum PITI
Your total monthly costs, or debt to income (DTI) adding PITI and long-term debt like car loans or credit cards, should not exceed 41% of your gross monthly income.
Monthly Income x .41 = Maximum Total Monthly Costs
$3,000 x .41 = $1230
$1,230 total - $870 PITI = $360 Allowed for Monthly Long Term Debt
FHA Loan ratios are more lenient than a typical conventional loan. They are great for purchase and allow "Cash Out" refinancing to 85 percent appraised value for improvements, bill consolidation, education, or any worthwhile purpose. Rate term refinance goes much higher ltv's with no cash out.
Compensating factors often allow us to exceed normal ratio limits. Your mortgage expert will be able to quickly analyze which lending option is best given your plans and goals.
Company NMLS: 204559
www.nmlsconsumeraccess.org
315 Broad Street
Gadsden, AL 35901
Phone: 256-NEW-LOAN
rod@mtgquote.com
Rate are subject to change any business hour with market fluctuations. All loan approvals are conditional, not guaranteed, and subject to lender review of all information. Loan is conditionally approved when lender has issued approval in writing, but until all conditions are met, the loan cannot be funded. Specified rates may not be available for all borrowers. First Equity Home Loan, Inc. is an Equal Opportunity Mortgage Lender/Broker, licensed as a consumer lender in Alabama, NMLS #204660
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