U
SER
’
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G
UIDE
— 11
(Cont’d)
INCOME RATIO =
TOTAL HOUSING EXPENSE
GROSS MONTHLY INCOME
DEBT RATIO =
TOTAL HOUSING EXPENSE + MONTHLY DEBT
GROSS MONTHLY INCOME
Note: Typically, when figuring government loans (FHA/VA), these
formulas also include estimated expenses for maintenance and
utilities (added to the Total Housing Expense for both ratios).
Also, real estate financing and qualifying varies per region and by
lender, who of course, take other factors into consideration, such
as a buyer’s credit and employment history.
2) Calculates the maximum loan amount for
which a buyer may qualify, based on the stored
income and debt qualifying ratios and the entered:
• Term
• Interest
• Annual Income
• Monthly Debt
—and optional—
• Annual Property Tax and Insurance
• Annual Mortgage Insurance (Private Mortgage
Insurance or PMI)
• other monthly housing expenses (e.g., home-
owner’s association dues)
The output of this key is as follows:
Press Calculation
1 Displays stored Qualifying Ratios (e.g.,
28%-36%)
2 Restricted/Maximum Qualifying Loan
Amount *
3 Buyer’s Actual Ratios (Income%:Debt%)
4 Unrestricted Qualifying Loan Amount *
5 Maximum Allowable Debt
(Cont’d)
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