How do I qualify for a mortgage?
There are three major factors considered in order to qualify for a mortgage. They are: the ability to pay back the loan, the likelihood of paying back the loan, and the value of the home being used as collateral.
These three factors are qualified by verifying income and savings, checking credit history, and appraising the property. It is this information which determines whether a loan will be approved or not.

How much can I afford?
Conventional (FNMA and FHMLC) guidelines, which are those most commonly used, allow a borrower to spend up to 28 percent of their gross monthly income towards paying all of their housing expenses. Housing expenses consist of:
* Monthly principle and interest payment
* Monthly portion of property taxes
* Monthly portion of hazard insurance
* Monthly private mortgage insurance payment (required only on loans with low equity)
* Monthly condo association or Planned Unit Development fees (only on applicable properties)
Other loan programs allow the housing ratio to be higher, sometimes as high as 33 percent. However, it is a good rule of thumb to use 28 percent as a qualifying ratio.
Guidelines also dictate how much of a borrower's gross monthly income can be obligated by "other debt." This debt includes all loans, leases, mortgages, credit cards, child support, alimony, and other obligated debts. When the minimum monthly payments of all these debts are added to the housing expenses discussed above, the total can not exceed 36% of the borrower's gross monthly income (although some programs allow total debt ratios of 38% and 41%).

Castle Mortgage Corporation is a licensed First and Second Mortgage Lender in the State of Connecticut. Equal Housing Lender. Equal Opportunity Lender.

Last modified on Monday, July 15, 1996