Ratios for Qualifying for Mortgage vs Reality

[Irvine Dream]

Just checking to see if (new) home owners have input on ratios utilized for qualifying for mortgage vs reality.  The housing expense (PI, Property Tax, Insurance, HOA) can be up to 0.43 of the gross income for qualifying.  In reality, with day care cost and taxes, can this ratio be actually accommodated? 


Added Poll

 

[AW]

Depends on the individual. I know there are folks with more than one kid in Irvine daycare (that's like almost $3k), and monthly car payments, there's no way they can make the numbers. 
There's front end dti and backend, one just looks at housing related and the other includes other recurring expenses

 

[Coleman]

mortgage + property tax + HO insurance + HOA + MR/ gross income = ~22.5% 

Buy a bigger house?  Man - I need to go find out where the gigantic hole in my expenses is at.  I feel like I am broke. 

Anyone know why they always use gross for these calculations? Seems like net would be a safer bet.

"A Safe bet starts with your net!" Now I just need a company for that motto.

 

[bones]

mortgage + property tax + HO insurance + HOA + MR/ gross income = ~22.5% 

Buy a bigger house?  Man - I need to go find out where the gigantic hole in my expenses is at.  I feel like I am broke. 

Anyone know why they always use gross for these calculations? Seems like net would be a safer bet.

"A Safe bet starts with your net!" Now I just need a company for that motto.

That calc just shows you're ready for the big time. GTFOFR!  >

 

[AW]

I guess if you're a DINK and no other expenses, the calc would work.
For everyone else, other expenses aren't mandatory.  Optional $ include retirement contributions, cable tv, phone, internet... Have kids going to daycare, get retired grandparents to move in to watch the kids
Have car payments, end it and buy an older used Corolla
Food, go stock up on cheap and bulk items at Costco

 

[Coleman]

mortgage + property tax + HO insurance + HOA + MR/ gross income = ~22.5% 

Buy a bigger house?  Man - I need to go find out where the gigantic hole in my expenses is at.  I feel like I am broke. 

Anyone know why they always use gross for these calculations? Seems like net would be a safer bet.

"A Safe bet starts with your net!" Now I just need a company for that motto.

That calc just shows you're ready for the big time. GTFOFR!  >

haha!  Once you move to Foothill Ranch you can't afford Irvine.  Ask Cal Court. 

#foreverpoor

FR can be like the Orange County Inland Empire where people go to buy cheaper houses so they can buy a lot of toys. 

Now I just need a boat, dirt bikes, and a dune buggy.

 

[The Motor Court Company]

LOL.
We live in Irvine and our mortgage + property tax + HO insurance + HOA + MR/ gross income = ~12.5%

And I can just walk into WF any business day and pay off our mortgage, still has our 401ks and investment account intact.

So yes we can also afford toys like people who live in FR with 22.5% ratio if we want to, perhaps more toys.

 

[bones]

LOL.
We live in Irvine and our mortgage + property tax + HO insurance + HOA + MR/ gross income = ~12.5%

And I can just walk into WF any business day and pay off our mortgage, still has our 401ks and investment account intact.

So yes we can also afford toys like people who live in FR with 22.5% ratio if we want to, perhaps more toys.

I'm disappointed Tccc. Thought for sure you would be the first to roll in with a single digit DTI.

 

[The Motor Court Company]

that's for ballers like Homie or Qwerty not us.
Perhaps we can pay down some principal to get to single digit DTI, but that's stupid with our 30 year fixed loan at 3.25%.

LOL.
We live in Irvine and our mortgage + property tax + HO insurance + HOA + MR/ gross income = ~12.5%

And I can just walk into WF any business day and pay off our mortgage, still has our 401ks and investment account intact.

So yes we can also afford toys like people who live in FR with 22.5% ratio if we want to, perhaps more toys.

I'm disappointed Tccc. Thought for sure you would be the first to roll in with a single digit DTI.

 

[paperboyNC]

When I tried to refinance my mortgage they said I was over 43% and denied me, but in reality I'm under 30% and they just don't count a lot of my income and my wife's income.

 

[AW]

If it's not a consistent w2, or have some history, lenders are pretty stringent.
Or underreporting income.

 

[woodburyowner]

I've been struggling with this question lately when looking at new houses.  I've always taken a conservative approach (DTI ratio in the teens), but now I wonder if I should have gone a bit more aggressive when I bought a few years ago.  If I had, I probably wouldn't need to be looking for a larger house now.  Sometimes I really hate the savings mentality. 

 

[Irvine Dream]

I've been struggling with this question lately when looking at new houses.  I've always taken a conservative approach (DTI ratio in the teens), but now I wonder if I should have gone a bit more aggressive when I bought a few years ago.  If I had, I probably wouldn't need to be looking for a larger house now.  Sometimes I really hate the savings mentality.

Based on the poll results so far 8 out of 10 have less than 0.3 debt/income ratio.  If this holds, Irvine prices going down is slim and there should be move up buyers soon.  Hence, buy what you like if the lender says you can and don't be too conservative.  I know this is based on all of 10 responses whose accuracy cannot be verified but for whatever it's worth.

 

[Coleman]

LOL.
We live in Irvine and our mortgage + property tax + HO insurance + HOA + MR/ gross income = ~12.5%

And I can just walk into WF any business day and pay off our mortgage, still has our 401ks and investment account intact.

So yes we can also afford toys like people who live in FR with 22.5% ratio if we want to, perhaps more toys.

Buy more toys... I will store them in my 3rd garage stall.  ;D

(not responsible if they go missing from the 'hood' though)

On a serious note - I am impressed with your accumulation of wealth with a single income.
I should have bought more PBR with you guys.

 

[The Motor Court Company]

we are dual income but disproportionate.

despite our low DTI, we are living as if we have 47% DTI. so no need for a 3rd garage for toys.

also speaking of toys, I do know a family with too much money they just buy a house every 2 - 3 years in the same neighborhood and let the house sit idle and use for storage purpose only (i.e. extra garage to park extra cars). they are the real ballers.

LOL.
We live in Irvine and our mortgage + property tax + HO insurance + HOA + MR/ gross income = ~12.5%

And I can just walk into WF any business day and pay off our mortgage, still has our 401ks and investment account intact.

So yes we can also afford toys like people who live in FR with 22.5% ratio if we want to, perhaps more toys.

Buy more toys... I will store them in my 3rd garage stall.  ;D

(not responsible if they go missing from the 'hood' though)

On a serious note - I am impressed with your accumulation of wealth with a single income.
I should have bought more PBR with you guys.