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What percentage of monthly income is allowed to pay monthly mortgage?

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July 16 2012 - Hillsboro
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I have programs that go as high as 55% for new home owners, and Harp Programs that I have seen as high as 62%. It really depends on your exact situation. If you are trying to squeeze a little more juice out of how much you are qualified for, you really need the assistance of a mortgage professional that knows what they are doing to get you to your max.

Some people might think going to your max and stretching is a horrible idea. I would agree, but I also realize that when you are trying to help someone get the maximum there may be factors that do not play into the scenario like someone else helping to make the payments but not on the loan.

This happens on VA loans when the veteran has a fiance, but is not married yet.

I do not condone someone maxing out unless they have some compensating factors like reserves, expected increases in pay, etc.
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July 27 2012
The Treasury Department's HAMP program targets 31%.That's a good place to start the discussion. After that, it will depend on the product, as the mortgage brokers replying to this past have said.
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July 17 2012
It all depends on the product:

Conventional products will be dictated by what the findings (automated underwrite) will approve. The housing or "front-end" is considered but it is not the be all end all rather the total of all debts. Individual lenders may cap the "back-end" ratio (total of all debts/income) regardless of the findings such as 42, 45 or 50, 55% this depends on their appetite. If your loan requires MI (Mortgage Insurance) the ratios cap at 45% back-end. 

FHA allows a 31% front-end ratio (includes taxes, hazard insurance, mortgage insurance, and HOA) and 43%. However with compensating factors you can go higher. Again, lenders could cap it however they see fit. 

USDA Rural will allow  29% and 41% respectively, unless the automated allows higher due to compensating factors.

VA works a little differently 41% back-end is the standard, but you can go higher if the findings allow. However you have to meet the required residual determined by your household size and area, which includes your tax burden. If you go over a 45% back-end then you have to have 120% of the required residual. 

Common sense should rule, your best bet is to meet with a qualified mortgage professional and go over your individual goals and needs.
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July 16 2012
It depends on the financing type.  Conventional typically stays around 30% and FHA goes a little higher.  A lot of it has to do with your back ratio as well.  You will more than likely be approved for much more than you can actually afford so make sure you know yoru budget.  I see people get approved at a 50% gross income back ratio all the time.  That is very high considering the average person doesn't take home anywhere near their gross income.

Make a budget and figure out what you can afford.  Remember the utilities and ongoing repairs.  Only you know what your comfortable payment is.

Best of luck!
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July 16 2012
 
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