Everybody cherish to own a home. Not all can afford it. To get a mortgage is not at all a difficult task. But it is not so simple either.

To get approved of a mortgage loan; first, assess

How much do you earn? How much unpaid debts you have? How much do you pay for your unpaid debts every month?

Usually your debt load is an indication of your current financial situation. When your earning is less than your pending debts, you are in a financial crisis. If your total debt is much less than your income, it is a sign of your sound financial status. Home buyers as well as sellers count on this part before making a transaction.

Before opting for mortgages, potential buyers will think; “How much can I afford?” and the sellers approve a loan amount reflecting over; “How much can the buyer afford?”

A proper solution to all these questions can only be extracted if you calculate your debt to income ratio. Usually, debt to income ratio is calculated by dividing your total monthly debt by your gross monthly income.

What can you work out from your debt to income ratio?

The value helps you to extract information, of how much your income will bear

Monthly mortgage payment Principal Interest Tax and Insurance

What is the common rule of most of the mortgage lenders?

Majority of the experts are of the opinion that the net amount, you spend for your mortgage, should not exceed 28% of your total income. And the amount you contribute to pay off your student loan payments, credit card bills, car loan payments and any other debts should not exceed 36% of your total income. However the value may vary widely.

The lender reviews your total debt to income ratio to judge your creditworthiness. They judge your capacity to bear the mortgage burden by assessing your income against your current debt payments, added with the new mortgage loan.

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