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Profile picture for jmarenus

How are pre-approved purchase amounts always even numbers if they are based on a specific max DTI?

I've been noticing that purchase prices in pre-approval letters are almost always even numbers.  If the calculations are done exactly given a certain max DTI, the resulting amount would be not be an amount like ###,000.  How do lenders typically come to these even amounts?  Do they simply round to the nearest thousand?  What other factors are considered that contribute to the even amount?  Thanks!
  • February 18 2014 - US
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Answers (3)

Profile picture for Arizona Mortgage Pro
They are rounded off and can vary depending on the amount requested. If you qualified for a $400,000 mortgage, but were only looking at homes in the $200,000 range, I certainly wouldn't provide you a letter showing how much you *could* qualify for, but rather how much you wanted. Most mortgage professionals will probably round down a little for some cushion.

Also, it is worth mentioning that it is impossible to do an exact debt-to-income ratio until a property is identified as the new housing payment (including taxes, insurance, etc) is part of the calculation. The fact that you are searching for a home means those items are not yet known quantities. A good mortgage pro will use placeholder figures to make sure you are in the right ballpark, but again, they are unknowns.  

I hope that helps clear up the issue for you. 
  • February 18 2014
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Profile picture for daveskow

Most pre approval  letters are indeed rounded  off  ....

  • February 18 2014
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The DTI isnever an even number but purchase prices are always rounded numbers so they are based on the max rounded sales price you qualify for.

All pre-approvals are based credit and income . A good loan offcier will look at your tax returns, credit rport and paystubs to make sure there will be no issues.

Best wishes!
-Scott
  • February 18 2014
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