Two ratios are calculated by mortgage lenders to determine a buyer’s maximum loan amount:1) the front ratio and, 2) the back ratio.
Front Ratio: The total mortgage payment including principal, interest, taxes and insurance (PITI) as well as any condominium or homeowner association fees divided by your total GROSS income. Traditionally, this ratio must be below 30% Example: With a gross income of $5000 per month, a total mortgage payment (PITI) of $1350, the front ratio would be 27%.
Back Ratio: The total mortgage payment PLUS any car payments, credit card and any other loan payments including student loans divided by your total GROSS income. Traditionally this must be below 40%. Example: With a gross income of $5000 per month, a total mortgage payment of $1350, a car payment of $325, 1 credit card payment of $60 and 1 student loan payment of $150 for a total of $1885 with a back ratio of 38%.
For more information or to set up an appointment call Julie at (703)765-0300.If you need help calculating your ratios, please contact Julie Nesbitt at 703 765 0300.
What are buyers seeking?
A new Realtor.com® survey of more than 1,000 home shoppers has shown that this season’s typical home buyer is searching for a three-bedroom, two-bathroom house with a garage and updated kitchen. 93 percent of survey responses indicate wanting a home with at least two bathrooms, and 44 percent indicate wanting a home with three bedrooms. Of the respondents, 27 percent rate the garage as one of the most important features, more important than even an updated kitchen (24 percent) and open floor plan (20 percent).
