How much of a home loan can I qualify for?
Prequalifying for a mortgage requires a mortgage professional to determine the size of a home loan. Mortgage lenders analyse your income, your credit history, score, and how much of a down payment will be required (if any). Lenders also use a calculation called debt to income to estimate the monthly mortgage payment. Debt to income is a comparison between your monthly income and monthly debts. After providing the mortgage lender with your financial information, the lender will decide which mortgage loan is suitable for you. There are four popular home loans available, FHA, VA, USDA, and Conventional mortgages. See below
The FHA, VA, and USDA are government insured (or guaranteed) by the Federal government. The FHA is extremely popular due to it low down payment of 3.5% and low credit score requirements. The VA loan is a great way for a cash strapped veteran to purchase a home. The veteran home loan does not require a down payment . . . 100% financing and the seller is permitted to pay all closing costs on behalf of the veteran. The USDA loan does not require a down payment and the seller is permitted to pay a percentage of the buyer’s closing costs.
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