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tagged: bad credit, Bad Credit Mortgage, buying a house with bad credit, FICO score, get a loan with bad creditFront End Debt Ratio
Posted by GuestPoster in Personal Finances
Most lenders adhere to what is called the debt to income ratio when determining how much money to loan you for a house. This is basically how much of your gross income (the amount before taxes are taken out) will go to pay for your housing expenses. These expenses include not only the house payment, but also interest, homeowner’s association fees, and property taxes. The general rule is that your housing expenses shouldn’t exceed 28% of your gross income; this is the front end debt ratio which is different from your back end debt ratio which includes all your financial obligations. There is not a lot of wiggle room in these figures. If the ratio is too high, then the bank assumes you can’t afford the loan and they will refuse the mortgage loan.
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