Guide On How To Calculate What Monthly Payment You Qualify For - (Debt To Income Ratio)
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- เผยแพร่เมื่อ 25 ก.ค. 2024
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There's a free worksheet I created called "How to PQF Yourself" that includes an interactive DTI Ratio Page that shows you visually how it works. Get it here: www.javiervidana.com/freebies
The only real estate person i watch and trust on TH-cam
This equation was actually spot on with my pre-qualification last year nice 👌 lol
This is an extremely underrated channel. Most people go into these situation completely unaware of what needs to happen. Great info!
Thank so much. Very insightful we are currently in CA but have been wanting to move to AZ for the last three years. I’m learning a lot.
I’d say the easiest equation would be to multiply 45% by your gross yearly income, divided by 12, minus your current debt, equals the housing payment you can’t go over.
So: 45%xGross Annual Income/12-Current Debt=Your Housing Payment you can’t go over.
Thanks!
$130 😢
Thank you for making these videos, they have been very informative.
Thanks for watching!
Mr. Vidana you have been a great blessing for my life, thank you so much! God bless you and your family!
Sylvia Marchante thank you!
Thank you so much for making this video... This is giving me and my wife a good foundation for buying. Thank you
Automatic thumbs up because I'm bias and also of Hispanic and/or Spanish origin but, yay! so glad i stumbled upon your channel.
Your videos are incredibly clear and I appreciate that they're ad free. Thank you so much Javier! I feel confident that I can learn what I need to know to purchase a home.
Great video!! Learned something new today.
Very informative video!!! Loved it!! I have a question: could you make a video talking about student loan and buying a property?? Thank you In Advance !!
My favorite part: And then you cry 😂😭
I'm binging all your videos by the way. So if you see random comments on older vehicles that's why 😁 You're amazing!!
Thank you for these videos.
Thank you for your expertise
Hi Javier, I wish you were here in California ☹So now that we now the payment we qualify for how do figure out the amount of a house we can qualify for? 🤔 thank you for your informative videos!!
Most helpful info on the internet!
Great video, although my only beef is the way you describe calculating gross income. From an underwriting perspective you do not take a weekly salary and multiply by 4 or a bi-weekly salary and multiply by 2… weekly salary is multiplied by 52 weeks and divided by 12. Bi-weekly is multiplied by 26 pay periods and divided by 12.
Wow thank you. Now, I will take this a buy a farm in the desert!
Hey mr. Vidana I was just wondering I have nothing but 3 credit cards on my credit report that I have paid off. What would I use in the debt portion of this equation? Just a little confused. Love your videos its helped me understand A lot about the home buying process.
Forever the best real estate channel
Is it bad to pre qualify if you dont have the down payment up yet? My heart is dead set on this modular home I'm looking at and I now know my debt to income ratio would qualify by looking at this video and I'm working tirelessly to get the down payment up!
Awesome video!!
Great video Javier! I just found your channel and have started to watch your videos. Thanks for making informative videos! I have a question about the part you put the credit card minimum payment on the debt of the formula. So, even if we have $0 debt on a credit card we still need to put the minimum payment of the credit card as a debt? Am I right? So if someone has 10 credit cards and has $0 debt on them he/she still needs to add up the minimum payment of each card as a part of the debt? I appreciate it if you clarify this to me. Thanks 🙏🏼
Ehsan Fereyduni - No Ehsan... If you do not have any monthly payments due on your credit cards, consider there is ‘no debt implied’. The minimum payments on credit cards are calculated based on the total amount posted as the balance amount you actually owe on your statement for each card. As you state you don’t owe anything on them, because you haven’t used them, this may (in effect) help your ratio calculations during the underwriting process.
Question. Buying a 3unit multi family as an investment property would it help with the DTI ratio ? For example if each unit can be rented for 850 a month.
Question. How about if your in sales. It varies a lot. First check is hours. Second commissions. And every month commissions are diff. Get the gross the whole year?
Thank you!
Thank you again
Great video! Really broke it down for me. Question: what if you’re hourly and your weekly pay varies? Should you only look at 40hrs or average it out?
Lender may average it out
I watch you because I live in Phoenix too
Let me know when you’re ready! 😁
“and then you cry..” added that so smoothly 😂😂
my would be DTI with a house mortgage would be 84%
Can I increase my income by getting a second job to lower that down under 50%
Hey Javier, just to be clear, that potential rate is for the mortgage only right, that’s doesn’t included the prop tax or anything like that?
I have question:
I work for the state as a chaplain for SC, I make 46,000 a year and this is reflected on my last pay stub from 2019. However on the w2 it reflects i made 38 and change. I inquired about this I was told because a certain amount of pretax is taken out for our police retirement etc. My question when applying for a loan, will the lender consider my actually salary (46,000) as reflected on my pay stub at the end of the year or only the w2? I can confirm my salary by also getting an employment verification letter
Great advice Javier! I love that I can have this formula to show my fiancé so it’s not just an opinion of how much I want for our monthly payment.
heeeehee just dont over spend.
Hi. I had several credit cards that I have paid off and now have a zero balance. I have left the accounts open to help with my credit score but it now appears that those would also be factored into my DTI even though they are paid off? So do you recommend me closing them out and watching my credit score drop or Leaving them open and effecting my DTI?
My husband last check stub says he made 80k gross but the the w2 said 69k in taxable income.. Which should I go by?
What if you have two jobs? I have one full time position and one part time position (that I have had for three years).
Why do I see DTI at 36% for some things, mainly credit card debt I guess... I always use this number. Is that too conservative?
If I want to get a car loan will they see the adjusted gross income or gross income?
What if you have a student loan in forbearance and currently not making payments on it, but you owe the amount?
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Aquarius! What’s my sign mean? Curious to know 😁
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If a 2 BDRM is 240,000.00 and I put down 3% is that good amount or should I put at least 10% down to lower the loan amount down
Hi Javier I live in NYC and looking for a condominium, I am going to neighborhood housing services and they are downpayment assistance program
Sir I have a question regarding the debt to ratio
Is there a email address I can send to you?
I’m so confused. Well I wasn’t until I saw 5,200. Where did that come from?
The Realitor check my credit score and he told me I have 753 mid score of my credit. I make 3,200.00 monthly and I only have $36 in debt of my credit card. I submitted all my documents to him about 4 days now. I have not heard anything from him. I want know how much I qualify for. I’m hoping to hear from him soon. Should I go with my own bank instead of trying to get approve from somewhere else? Plz help thank you! First time buying
I thought gross monthly income was the amount paid before taxes. So net payment on your check is after all the crap is out?
ok so mine is 1,260 but how does it work if my partner has 1,200? does it add up both of us or?
What about collections ? How does this work with your DTI ratio ? It’s not a monthly payment but it is debt ....
If you have a payment plan on it then use the payment, people buy with them all the time you just need it to be on a payment plan
I have heard that if you have 10 payments or less on your vehicle that it is not included in your debt to income ratio. Any validity to that? Also, when getting pre approved do most lenders require additional funds besides down payment? I have been doing so much research and your videos help a ton. I live in Florida and buying a home here as a first time home buyer is overwhelming! I have the job history, debt to income, fair credit score, and money for 3.5% down. I am so nervous about getting prequalified because outside of the down payment funds I don't have much additional funds. Should I be concerned about getting prequalified or should I wait to save money funds before getting prequalified?
I’m in this same boat. Only I’m in Chicago. From being unemployed a couple years ago I went through $12,000 of savings and now have about $22;000 left. I’m scared they will see I don’t have a lot of investments or other funds and send me packing. Doesn’t help I don’t make a lot but I know getting in a house will probably be cheaper for me in the long run than trying to rent. So overwhelming and stressful.
I'm in FL as well and looking to purchase. How things turned out with you?
Hi Javier, I understand that these calculations are generic and approximate. I don’t understand why a lot of these assumptions are based on “gross” as opposed to “net” monthly income. For instance if a state worker has a pension (California) that we must pay into monthly, our net is significantly less than compared another counterpart is making, gross without a pension. How should I modify this calculation to reflect net income?
Chad Nishida it’s weird huh? Why would they use the amount you DONT get? However for pension, I’m not too sure how it works with pension so let me check!
Exactly! 17% of my husband income goes to pension
With the example that you gave us how much of a house can they afford? What would be the house price ?
Every state is different! Im making a follow up video on how you can determine that in your area. For now you can use the estimates you find on sites like Zillow
Good stuff...So how much house they can afford with $1800 payment
Depends on your city/state. Check out my follow up video to find out!
panic attack then I saw you said gross.. thanks!
My parents gave me a ton of advice. In my youthful ignorance I ignored 90 percent of it. But the one thing I luckily didn’t ignore is my mom constantly warning me about credit cards and credit score. So many young people dig huge debt holes they have to crawl out of and wish they could go back and do it differently. Thanks mama! I owe you one 😉
How do I calculate my annual salary if I am tipped. I make $7.69 an hour and the rest is the gratuity which you can round it to $25 to $55 an hour depending on the business. Thanks!!!
Tips are based on what you report on your taxes. I think they would use your income as one source and your tips as a secondary which will be calculated based on the last 2 years average.
Javier Vidana thanks man straight to the point 👏🏻👏🏻👍🏻👍🏻
Is this equation still accurate in 2024? Im just trying to get an idea because i wanted to know my price range on buying multi-family properties knowing theyll only credit 75% rental income. Deciding if its beneficial or not to get the loan with my partner even though she has a mortgage already. We dont plan to let go of that house.
So how do you take that further to figure what price range to be looking for in order to hit that payment?
It depends on your down payment and interest rate.
Javier, do we also calculate the current rent, electric and tv bill?? Those will not remain once we move into the new home.
No sir, no utilities of any kind
Javier Vidana man. Using that formula, my potential payment amount is $3700.... awesome. Now I can afford a dump in the Bronx... I hate NYC.. does the potential payment amount includes property taxes as well??
Ps4gamer yes it does! My follow up videos will help you determine how much of a house you can qualify for!
I tried to do this formula. So lost, lol
Do you have any videos on VA Loan Home buying details? I'm curious to know how the potential payments work with VA loan and fixed interest without mortgage insurance cost. Clearly, i could just add them into ky equations, but I'd like general details as to the differences in the process
What if you own a car that is under your spouse's name. However, I am the breadwinner. Since I am head of the household, I am assuming that debt is added to mine as I am the sole breadwinner?
The Fanriot - If you live in a joint community property state and/or file taxes jointly, the couple’s overall debts are considered for obtaining a mortgage loan.
how is your child support added to your debt to income ratio ? Can you explaing?
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5 points away from an excellent credit score And I have no debt… like none..
Day care costs included in this debt to income ratio?
No. They should though! 😅
We don’t have a kid but we took day care costs into consideration when we figured out real estate prices we could afford.
Who pays the real estate agent? Is the agent paid with closing cost?
agent is paid by the sellers
How does charged off debt apply? If the credit card is completely charged off and I am not making any payments is the card used in my debt ratio?
No!
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Sooooo i recently paid off all my credit cards now they all have a very low balance do i go by the minimum payment now or the ones before i paid them all down???
Ramei Dunklin I’m assuming if they’re paid off you wouldn’t count them anymore? Which is the best scenario! Congrats on being debt free :)
Ramei Dunklin - Go by the monthly minimum amount on your current monthly statements, which is what the lender and/or underwriter will see on your credit report. They will have no way of knowing what you owed on them in the past (before you paid them down)...
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Do you add child support too even though it doesn’t show up on your credit?
Great question yes do add it.
In regards to child support, let's say for example you make $55k a year and you have child support payments coming out of your paycheck. If that 55k is your annual income and it includes child support do they still calculate the child support as debt individually?
Josh Williams In my experience then you calculate whatever your monthly gross income is MINUS the child support they removed. Make sense?
@@JavyVidana Got it!
Mine was 41?
What if I have no debts? Just bills. But still have about 7 open credit accounts in a 0 balance
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I'll see myself out...
Do you include rent?
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I told my loan agent that I have 30,000 for down payment. He told me what I qualified for. But I forgot about closing costs. So if I only put 20,000 down so I can have 10 for closing ,will that change my qualifying amount?
I think instead on focusing on the amount focus on the %. You can do 3, 5, or 10%. I would have two plans, one if you find a house where the seller can pay cc and the other if you have to pay your own.
First!
What if you have student loans but are still in school so you don’t have to repay until you’re out of school for a least 6 months?
Trevor Reynardo that’s usually the case but I would double check with the issuing institution.
Ashley C. So since you’re not paying the loans just yet, do they count toward debt to income ratio?
Trevor Reynardo Yes
Makes no sense, why subtract $370 if your going to add it back again to $1970?
what if you have no debt?
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Does rent count to the debt number?
What if you don’t have any debt, for example if rent and phone bills didn’t add to that and those were your only bills
Nope, rent doesnt have to go on it
Biweekly, you actually get paid 26 times a year not 24, so wouldn’t your gross monthly technically be more?
However many times you get paid yearly is irrelevant, calculate what you make monthly. If you’re salary, then break down your annual salary by 12.
Javier Vidana but when they try to max what I can afford will they calculate it that way? I did the math and it’s a couple hundred dollars different for me but not sure if it really makes a difference when I try to get preapproved
If you are paid bi-weekly you would calculate this by multiplying by 26. The extra money will make a difference to your debt ratio
fLiPnoTTiC I see what you’re saying! Luckily Lizy Hoeffer responded above me answering your question . It does make a difference for sure.
So x = mortgage payment at a 45% DTI. Your equation simplifies to:
x = (.45 * Gross Income) - DEBT
And if you wanted to do a 40% DTI, you can change .45 to .40
If my husband has been working for five years but I don’t work can we still get a house with his job history.
Yes
Dinah Kitchen - Corina V. is correct... Meeting all requirements, your husband can qualify for a loan on his own.
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Having another house is really gonna eff me...right?
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Who the hell has this little debt obligations…… ??
I messaged you on your website hope to hear back from you my name is Seth
Sethy1818 I got it! Will answer soon
Hi.. BUT, Way to FAST!!!!! You need to pause or slow it down a lot!!!!!!
Aye you lost weight 👍
You just confused the shit out of me