calculating your ratios

If you're self employed 
an Easy Qualifier Loan 
may work for you.

Lenders calculate debt service ratios to assess the risk of default when making a loan. These ratios express the percentage of pre-tax monthly expenses to pre-tax monthly income. To calculate your ratios use these formulas (make sure to use monthly figures):
 Front end ratio (primary housing ratio)

P,I,T,I (1) / stabilized monthly income (2)
  1. home loan principal + interest payments+ property taxes + insurance
  2. sources of income can include: salary, interest and dividends, rental income, retirement distributions, disability income and spousal support.

Back end ratio (total debt ratio)

P,I,T,I + monthly payments on all debts / stabilized monthly income

 

Acceptable ratios

Generally, ratios are acceptable for high quality loans if the front and back end ratios are <= 30% and 45%, respectively. However, there is flexibility depending on the type of loan and compensating factors. There is significantly more flexibility for adjustables and interim arm loans than with 15 and 30 year fixed loans. Through effective advocacy and the expertise to correctly match borrowers needs with underwriting requirements, we have secured numerous high quality loans for clients where the front and back end ratios were as high as 40% and 60%, respectively.

Many of our Adjustables and Fixed Rates offer….
  • No Point and/or No Fees (we may even pay your title and escrow services)
  • Preferred rates for LTVs < =70%
  • Preferred rates for excellent credit (click here to read about FICO Credit Score)
  • Ultra low Interest only and deferred interest payments

Click here for a complimentary proposal on any of our No Point and / or No Cost Adjustables or Fixed Rates.