Owens & Company: Qualifying for a mortgage

What are the criteria for determining whether you qualify for a loan?

There are three main factors that determine eligibility for a loan.
	Monthly income before taxes
	The general standard for mortgage loans is that housing not exceed 25 to 28 percent of the monthly gross income of the household. This includes principle and interest on the loan, property taxes, and homeowners insurance. According to the American Housing Survey the average cost of property taxes is $12 per $1000 of value and property insurance averages $30 per month.
	Long term debt

	Your monthly debt load will also be a factor in qualifying for a mortgage. The lender will consider regular monthly bills and long term debt in considering your application. Long term debt is classified as any debt that goes over ten months into the future. Housing and long term debt should not be more than 33 to 36 percent of the monthly income. It is a good idea to pay off as much long term debt as possible before applying for a mortgage. Back to top
	Cash available for the down payment and for closing costs
	The general down payment amount is 20 percent of the asking price of the home. If you do not have enough money for a down payment, another option is to get Private Mortgage Insurance that will allow you to get the house with as little as 5 percent down. Closing costs range from 3 to 6 percent of the loan amount.
	This information is provided as a service of Owens & Company Real Estate. It is meant for general information purposes only and is not a guarantee of approval or qualification for a loan. Check with your lender for their rules and requirements. Back to top