Mortgage Affordability

Great question: I would start of by using a max debt to income ratio of 45% for a JUMBO loan product: this would include your mortgage payment, taxes and insurance along with any credit card and installment debt that would show up on your credit report VS your net income and that should be a good scenario. To be honest with you I would recommend that you have your full tax returns reviewed by a loan officer and an underwriter to determine your max loan amount as tax returns can be tricky as to what lenders use and what you think your AGI will be. You seem to be very knowledgable about your debt structure and income so that will help you understand the outcome from an underwriters review of your file. Also the online calculators are good for a generic income/debt structure but as you get more details involved in the equation it can become more of a challenge to get accurate answers.

Just a basic principle for an Underwriter to calculate your total loan you can afford. Keeping in mind that you have enough credit and credit history to qualify, and that you have a 2 year work history with verifiable income, the UW will use this formula...Take your gross earnings on your tax return. If you write off all your income on your taxes, that will be a problem. If your AGI is 9k a month, and underwriter will only use 45% of your income - which would be the max payments you can carry. This is the debt to income ratio or DTI. So if you gross 9k, 45% is $4,050.00. Now if you have NO debt (you can prove your employer pays your C/C) then you would back out tax and insurance payments. Lets say your area runs 1k for tax and insurance. Your max mortgage payment would be $3,050. this payment on a 30 year loan at a high quote of 5%, would yield a loan amount of 568k. So if you can show 9k a month, and have no debt, and you put 160k down, 736k would be the purchase price. This is only an example, but if you look at your adjusted gross on your tax return, taken into monthly income, and use only 45% of this, this should give you an idea of what an Underwriter will qualify you on as your max debt to income ratio.

While I would love to be able to give you a definitive answer to what you can afford, I just cannot do that based on the information you have given. It's impossible for anyone to do so until they review your credit report and see the full financial profile. However, I would love to review your situation and pr-qualify you. Please contact me and I can walk you through the process. Gregorio Denny - WeFixRates.Com. Licensed by the California Dept of Real Estate #01817727 and NMLS# 247044.