If your goal is to purchase a home within the next year, now is the right time to start preparing. There are three factors used to determine your mortgage qualification. Awareness of these three factors can truly help improve your financial security when buying a home and increase the strength of your mortgage qualification.  The second step is:

 

Debt-to-Income Ratio (DTI)

Where your credit score determines if you can qualify for a mortgage, your debt-to-income (DTI) ratio determines how much you are pre-approved to borrow. The less you owe each month in minimum debt payments, the more you can qualify to borrow and the stronger your application will be.

A good goal is to keep all of your non-housing monthly debt payments below 15% of your gross monthly income. Most mortgage programs require your debt-to-income ratio, including your desired mortgage payment, to remain below 43% to qualify.

Here is an example on how to calculate your own debt-to-income ratio:

 
Debts:
$100 in credit card payments
$400 auto loan payment
 
Income:
$4,000 per month in gross income
 
Debt-to-Income Ratio (DTI):
Monthly debt / Monthly gross income
$500 / $4,000
12.5% DTI

To apply for a mortgage loan, you can visit Verity Credit Union’s Online Real Estate Center. If you would like to speak with a financial services specialist to discuss your debt-to-income ratio, your credit scores or strategies on how to reduce your closing costs and down payment requirements, you can call 206-361-5320 or email mortgages@veritycu.com.

Jeremy Sankwich

Hello, I’m Jeremy – I manage the business development efforts for Verity’s mortgage department.  My passion is in helping Verity members down the path to financial freedom and home ownership. I try to go beyond the mortgage loan when helping members as I discuss real estate and financial education.

I have a degree in financial services and financial management from California State University.  I currently live in Auburn, WA with my wife and baby on the way.

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