Quote:
Originally Posted by Isabel  The 31%. Is that 31% of your gross income.
Your mortgage with taxes and insurance should be less then this 31%? Do they take other household expenses into account.
How does it work
let's say I make $1,000 gross. 31% is 310 but my other expenses might be 800. So wouldn't they decrease the mortgage to less than 31% cause even if they keep the 31% of mortgage, one would still be in a deficit.
This might all sound confusing. So basically what are the rules regarding the 31%?  |
Yes, 31% of GROSS income of borrower.
Household expenses are NOT considered when calculating the 31%.
When you're only making $1000 gross and have expenses of $800, you won't be approved unless you can drastically cut expenses.
Of course, it also matters how much you owe on your mortgage. A $310/month PITI-payment can maybe cover a $50K-mortgage, but certainly not a $500K-mortgage. That's where the NPV-test comes in.