qualifying ratio

Qualifying Ratio

The maximum debt-to-income ratio for a mortgage. If one's debt-to-income is not too high, one has a qualifying ratio and is eligible for a mortgage. The qualifying ratio varies by lender.

qualifying ratio

The maximum ratio of debt to income that will still allow a borrower to qualify for a loan. Lenders use two different ratios.The front-end ratio compares housing costs to income.The back-end ratio compares all consumer debt to income. Each lender has its own preferred ratios, which are usually dictated by demands placed by the secondary market or by loan guarantors such as the Veterans Administration.The numbers are not secret,but they change too often to include in a book.Be sure to ask a lender about its qualifying ratios and what exactly is included in the numbers.

References in periodicals archive ?
Analyzing your number of suspects, conversion ratio to prospects, and qualifying ratio into the sales funnel, along with your close ratio, tells us a lot about your future.
When a borrower is purchasing a new home, yet still has an outstanding mortgage on a property located in a Federal Emergency Management Agency (FEMA) Disaster Area, the lender may exclude the mortgage payment on the previous residence from the qualifying ratio calculation provided: 1) the previous residence is either heavily damaged or destroyed and unlikely to be repaired; 2) the lender obtains a property inspection of the previous residence confirming its status; and 3) the borrower provides the lender with information indicating he or she is working with the servicer to appropriately address the prior mortgage obligation and agrees to apply any property insurance proceeds to the mortgage on the damaged home.
Kleinhenz notes that the qualifying ratio is more than 30 percent in lots of instances today, trade-up buyers are able to make substantial down payments and there are a variety of loan products available.
As a practical matter the number or qualifying ratio many lenders use is closer to 40 percent, and in rare cases it could be 50 percent if there were no other household debts,'' he said.
The old measure of debt capacity--the split ratios of housing expense to income and total debt to income (DTI)--have been replaced by a single qualifying ratio (SQR) that doesn't explicitly take into account monthly household expense.
qualifying ratios and compensating factors), often engaging in Monday morning quarterbacking by focusing on early payment defaults.
Department of Energy, EEMs give borrowers the opportunity to finance cost-effective, energy-saving measures as part of a single mortgage and stretch debt-to-income qualifying ratios on loans.
CBMA offers an affordable mortgage program for LMI borrowers through the Massachusetts Association of Community Organizations for Reform Now with below-market rates, liberal qualifying ratios, and lowdownpayment requirements.
Calculate maximum FHA loan limits, qualifying ratios, up-front and monthly MIP
These can include missing or incomplete verifications of employment and deposit, a failure to document adequately the borrower's source of funds invested in the transaction, approval of a borrower with high qualifying ratios in the absence of sufficient documented compensating factors or with poor credit history, or a miscalculation of the maximum mortgage amount.
HSBC Mortgage Corporation (USA) is also offering its own CommunityWorks mortgage that allows for a discounted interest rate, expanded qualifying ratios, and liberal credit criteria designed to assist families purchasing either a one or two-unit property.
The liabilities from the import of the credit report populate the debt sub-screen in pre-qualification for easy calculation of qualifying ratios.