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 ?
Two mortgage lenders have told us their qualifying ratio is 28-to-36.
Look back at your previous performance and analyze your number of suspects, conversion ratio to prospects, qualifying ratio into the sales funnel, and your close ratio to determine your future.
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.
(2) Based on a 25% qualifying ratio for monthly housing expense to gross monthly income with a 20% down payment.
Plus, you can take advantage of a low down-payment option and a more flexible qualifying ratio (debt-to-income ratio).
The old measure of debt capacity--the split ratios of housing expense to income and total debt to income (DTI)--have been replaced by a single qualifying ratio (SQR) that doesn't explicitly take into account monthly household expense.
Several years ago, HUD began to focus on underwriting (e.g., 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.
And last year HUD announced that homes that meet MEC qualify for a 2 percent stretch on loan qualifying ratios.
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.
Fannie Mae and Freddie Mac responded by expanding qualifying ratios - the "2 percent stretch." The rationale behind the stretch is simple: Lower energy bills effectively increase the homeowner's ability to handle higher mortgage payments, and hence larger mortgages, than would have been allowed under standard qualifying ratios.