How to Get A Better Loan Without increasing Your Income - Using a Mortgage Calculator

By understanding your debt to income ratio (front end and back end ratios) you can easily anticipate how much money a lender will let you borrow. More importantly, knowing how to analyze your debt to income ratio can help you make the necessary financial changes to secure a better mortgage loan. To find this out all you need is a good online mortgage calculator.

For example, did you know that if you and your spouse each makes 45k annually, you may qualify for a $287,000 mortgage? Maybe even over $300,000? You'd be amazed at what you may be able to afford.

Of course credit score is a big part of the equation but well assume in this article your credit is good.

If your planning on a buying a home, understanding your debt to income ratio is critical in planning it tells the lender that after paying all your bills you have enough money to be comfortable and enjoy life, in other words your not house poor ( big mortgage payment and no left over cash at the end of the month.)

Lets look at the components of debt to income ratio and what numbers to plug into the mortgage calculator:

Income

First, take your gross annual income plus your spouses (if you're married) and add it together. Next add any income from outside your jobs: interest income or child support perhaps.

Expenses

Next, add up your monthly ongoing bills. This includes: car payments, credit card bills, monthly medical bills, student loans etc.

Next, determine your annual property taxes in the neighborhood you plan on living in. (Estimate if you dont know)

Also determine what your annual homeowners insurance will be. (Estimate if you dont know)

Loan Terms

Next, determine the terms of the loan you anticipate being approved for. For example a 6% loan / fixed rate mortgage over 30 years.

Hypothetical debt to income scenario

Total gross annual income (both spouses): $90,000

Total monthly debt (auto payments, credit card etc) $700

Annual taxes: $2800

Homeowners ins: $500

Interest rate: 6%

Length of loan: 30 yr

Entering this data into a good online mortgage calculator youll see the result: the maximum loan amount will be about $287,715.or $1,725. Monthly PITI. This is realistic figure based on a 36% back end ratio.

What if you had less debt, can you get a larger loan?

Say you had no car payment and which brought your monthly debt down to $250 (a credit card payment and a student loan)

Your new maximum loan amount will be $362,771 or $2175 towards PITI. This big jump in potential buying power is achieved without increasing your income at all only reducing your debt!

Why not experiment with a good online mortgage calculator? The web site at the bottom of the page has a great free mortgage calculator which gives you all the above data to easily analyze your home buying situation. Youll be surprised at what you may be able to afford.

For 15 years Leslie Collins has been helping all types of borrowers get the loan information they need to make the best home buying decision . Please visit the easy to use mortgage calculator before you talk to banks or loan officers. How much house can you afford? Don't guess - Find out with the affordability calculator - free simple report

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