Amount of mortgage based on salary?

I know there are a lot of factors that go into getting approved for a mortgage. Not worrying about credit / down payment / debt is there a general rule of thumb for how much income one needs to make to qualify? For instance, how much would one have to make to qualify for $500,000 or even $800,000? Thanks.

29 Answers

  • 1 decade ago
    Best Answer

    Mortgage companies use ratios to analyze your mortgage payment. The housing payment ratio (or front ratio) used in this calculation is 30%. The housing expense, or front ratio, compares your total mortgage payment to your monthly income. The total debt expense ratio (or back ratio) is 36%. This total debt expense, or back ratio, compares your total monthly obligations including your total mortgage payment to your monthly income.

    There are other factors used to determine one's ability to qualify for a mortgage.

    The amount of income to qualify for $500,000 mortgage would be the amount to equal 30% of the total monthly payment which includes the mortgage repayment (principal and interest), tax payment and insurance.

  • manger
    Lv 4
    3 years ago

    Mortgage Based On Salary

  • Rabbit
    Lv 7
    1 decade ago

    The old rules of thumb were: mortgage payment of 25 percent of earnings or 3-5 time annual salary. But then that was when you were expected to pony-up some 20 percent of the value of the house on your own in the down payment. My first house was for $18,000, so that was a tad bit easier back then for a simple 3 bedroom brick with a bath and a half. You are obviously dealing a tad bit more.

  • 1 decade ago

    It's not so much how much total you can qualify for, so much as the question is how much of a monthly payment can you qualify for. When you get pre-approved, and eventually approved for a mortgage, they base everything on your monthly payment and your monthly debt-to-income ratio. Mortgage companies calculate how much you make monthly, how much you would owe monthly (includes all debts, not just mortgage), and then figure out the percentage. You will be approved if the percentage falls within a range that you are allowed based on your credit, the amount of liquid assets you own, and the actual appraisal vs. purchase price of the home.

    The reason why bad credit hurts you, is that it increases your interest rate, and therefore increases your monthly payment and your debt-to-income ratio as a result.

    Source(s): This is a handy (although not wholly accurate) calculator to help figure out how much you can afford. Remember, only your lender and broker will be able to fully approve you for any amount. Good luck!
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  • Shofix
    Lv 4
    1 decade ago

    They will often use a debt to income, but as a rule of thumb, credit unions and banks will extend you a loan up to 4.25x your salary.

    Other mortgage brokers and so on will giev you more though, wlthough they may be a little skeezy.

    Hope this helps!

  • 1 decade ago

    I don't know exacltly what goes into someone getting approved for a mortgage. However, a $500K house on a 30 year mortgage would be over $2,000 a month and an $800 K mortgage over 30 years would be over $4,000 a month. Can you afford that?

  • 1 decade ago

    I've heard 2.5 times your annual income is a good place to start. Also your debt to income ratio plays a big part. Generally, if more than 40% of your income goes to paying credit cards, car payments and the like, you may have a difficult time getting a loan.

    Jim Reske, Realtor

    ERA Advantage Realty, Inc

    Port Charlotte, FL

  • SunFun
    Lv 5
    1 decade ago

    With no revolving debt, lenders will lend up to 42% of your salary for principal interest taxes and insurance payment. So if you bought a 500,000 home put zero down and borrowed at 6.34% for 30 years your monthly payment would be 3245 principal and interest. Then you would have your property taxes which vary greatly from state to state. Assuming you have a 2% property tax rate your monthly prop tax would be 833.00. Insurance on a 500000 home would run you approximately $150.00 per month So your PITI would be 4228 per month. 4228 is 42% of $10066.66. So you would need that much income approximately $10000 per month to buy a 500K home at those rates.

  • 1 decade ago

    Well, I must tell you one thing. I bought my home 20 yrs ago. I was fortunate enough to have a good credit, and control on my debts. It seems we are in the same wave length in that. I don't know what state you live in, but in most, it depends on what kind of mortgage (adj/fixed ) how many years (10,15,30 yrs x interest rate)

    but usually they add up all your debts vs your income and they determine from that, how much you can afford. look at all those wonderful websites: buying a home they are very informative.


  • 1 decade ago

    It usu sally based on your total expense vs monthly gross income. the numbers the industry uses is 28% of your monthly income can be used for mortgage. so if your mortgage is $2k a month, you will need to bring in about $8400 per month in income...give or take a few hundred bucks!!

    Good luck

    Source(s): I 'm a mortgage broker staying home from the hurricane!!!
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