When buying a condo, does the monthly maintenance fee count towards the 70/30 ratio for mortgage approval?
Assuming you have a good credit score--which I do, 698--I have heard that when getting approved for a mortgage, your mortgage payment must be around 30% of your gross income. If you were to purchase a condo, would they count the maintenance fee into the approval process.Example, the monthly mortgage is $600 and the monthly maintenance fee is $400 = $1,000. So that would mean, you need a gross income of $3,333 a month to be approved.Is this correct, or do they only look at the $600 monthly mortgage, which would mean you need to earn $2,000 a month to be approved? by jai_le from San Diego, California. Jul 5th 2011
John A Soricelli Jr (John A Soricelli Jr)
#167 ranked lender in California - 151 contributions
The easiest way to look at it is the bottom number (or the 30% figure you reference) would be that after factoring in all the debit on your credit report, plus all housing expenses, your total debit could not exceed 30% of your total income. The housing expenses are mortgage, taxes, insurance and yes any association or maintenance dues. The calculation is as you understand it to be - total income pre-tax x 30%. So if you were to gross $3,333 per month or $40,000 per year your total debit as described above could not exceed $1,000. P.S. 30% is a low figure - 45% is a better number.
Chris Gummerson (cgummerson11)
#397 ranked lender in California - 648 contributions
I agree with John, using 45% is more in line with what a lender will use. For example, take your gross earnings and multiple it by 45%. This figure is the most your debt can be, including mortgage payment, taxes, insurance, HOA fees, mortgage insurance and any and all debts on your credit report including child support. So if you make 10k a month, 4500 is max Debt to Income ratio 45%...All your debts need to be less than 4500.
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