Debt to Income Ratio

Your debt to income ratio is simply a way of determining how much money is available for your monthly mobile home mortgage payment after all your other recurring debt obligations are met. In some states we may be able to qualify you inder a stated income program (that is we "state" your income) however these kinds of programs are for land/home transactions).

Debt limit

There is generally a debt limit associated with each type of loan, such as a 28/36 qualifying ratio for a conventional loan.These qualifying ratios are guidelines.An excellent credit history can help you qualify for a mortgage loan even if your debt load is over and above the limit.

Understanding the qualifying ratio

Typically conventional loans have a qualifying ratio of 28/36. Usually an FHA loan will allow for a higher debt load, reflected in a higher (29/41) qualifying ratio.

The first number in a qualifying ratio is the maximum percentage of your gross monthly income that can be applied to housing (including loan principal and interest, private mortgage insurance, hazard insurance, property taxes and homeowner's association dues).

The second number is the maximum percentage of your gross monthly income that can be applied to housing expenses and recurring debt. Recurring debt includes things like car loans, child support and monthly credit card payments.

For example: 

With a 28/36 qualifying ratio:

• Gross monthly income of $3,500 x .28 = $980 can be applied to housing
• Gross monthly income of $3,500 x .36 = $1,260 can be applied to recurring debt plus housing expenses

With a 29/41 qualifying ratio: 

• Gross monthly income of $3,500 x .29 = $1,015 can be applied to housing
• Gross monthly income of $3,500 x .41 = $1,435 can be applied to recurring debt plus housing expenses

Rules of Thumb

• Debt to income Maximum is 60% on an in park purchase & 55% on land/home purchases.
• Refinance debt to income maximum, both in park and land/home, is 55%
• Unless you own your own business, the manufactured housing industry does not have a stated income program.
• If your home is on land, MobileHomeLoan.biz can use bank statement deposits as income for full documentation. If your deposits are into a business account, we count 75% of the deposits as your income.
• Up coming raises can be counted within 90 days of raise date. A letter from your employer is required.
• Alimony, child support, structured settlements, ssi, disability, ect., can all be used to improve your debt to income ratios. Proof that the monies will be received for atleast three years is required.
• Large transactions on your credit report that were cosigned loans can be negated with a minimum 6 months cancelled checks from the party making the payments.
• Business owners can use line items like depreciation as income.
• Rental income must be for one year before it can be counted.

As with any other guidelines, ValueLoans.com finds there are always exceptions to the rules. Strong credit scores, strong mortgage rating and equity within your home are all factors in changing the rules of thumb.     

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