The ratio that rules the file
Lenders divide your total monthly debts - the new housing payment plus cars, student loans, and card minimums - by your gross monthly income. Most programs approve up to 43-50% depending on compensating factors. That single ratio, not a salary threshold, is what qualifies you.
Work an example
Take an illustrative household: $9,000 a month gross, $700 of existing monthly debts, a 45 percent DTI cap. That leaves about $3,350 a month for the full housing payment, taxes and insurance included. What purchase price that supports depends on the rate, the tax rate and the insurance premium, which is why the same income can produce very different budgets in two different counties. Add another $1,100 of monthly debt to the same household and the supportable payment falls by $1,100, which removes a large share of the purchase budget.
Income lenders can count
Base salary, documented overtime and bonus history (usually two years), self-employment net income, rental income at 75%, and support payments with a track record. Cash income without a paper trail cannot be counted - which is a planning conversation, not a dead end.
Raise your budget without a raise
Paying off a car or consolidating cards often adds more buying power than a salary bump, because the debt comes straight off the top of the ratio. As a rough illustration, every $100 a month of debt removed frees $100 a month of housing payment, which at typical rates and terms is worth somewhere in the region of $15,000 to $20,000 of purchase budget. Ask for this run as a scenario months before you buy, while there is still time to act on it.
What to take away
- DTI, not salary, is the qualifying number.
- Existing debts consume purchase budget at a fierce exchange rate.
- Two-year history turns variable income into countable income.
- Debt removed comes straight off the top of the ratio, so it buys budget quickly.
Illustrative sample figures for a template demonstration. Not a rate quote, not an offer to lend, and not live market data.