Closing costs · View breakdown
HOW QUALIFICATION WORKS
CLOSING COSTS
Cost of the transaction itself. Paid in addition to the down payment.
Effect & details
Comprised of actual closing costs (title, escrow, lender fees, appraisal, govt fees, etc) + Prepaids (your new insurance policy, etc) + Impounds (a deposit for taxes & insurance)
DOWN PAYMENT
The cash you put toward the purchase price.
Effect & details
↑ Down Pmt = ↓ Risk (for lender), ↓ Rates, ↓ Loan Amt, ↓ Mthly Pmt; no MI over 20% down.
MONTHLY DEBTS
Monthly payments on debt you already owe.
Effect & details
Higher debt pmts = ↑ DTI = ↓ Qualifiable Amt
CREDIT SCORE
Your history of managing credit & repaying debt.
Effect & details
Higher score = lower rate, lower PMI, and better loan options. ↑ Score = ↓ Rate, ↓ PMI, better loan options. In reality, everyone has three credit scores. Lenders use the lowest middle score.
MONTHLY INCOME
Stable, documentable, pre-tax income from all applicants.
Effect & details
↑ Income = Capable of paying back a higher mortgage pmt; less risk for lender.
Income benchmark
See Capacity Equation. Lenders prefer combined income to be at least double combined debt pmts.
Additional scenario details
Employment type now affects program checks. Number of units is displayed only.
THE CAPACITY EQUATION
KEY CONCEPTS THOSE INPUTS PRODUCE
DTI
Debt-to-income ratio
What does this mean?
DTI is arguably the most important part of mortgage qualification. It's the percentage of the proposed housing pmt AND recurring monthly debts relative to your pre-tax income.
Program check
Programs that may fit
For estimate & illustrative purposes only. Not an approval. Each lender and program may have its own, different, or additional rules.
RULES OF THUMB
Keep in mind
Maximum ≠ optimal.
More
A payment that fits a ratio may still leave too little for your everyday budget. Include savings, repairs, and other spending in your plan.
What counts as debt?
See examples
Start with auto and student loans, credit card minimums, personal loans, and other property payments. Do not count this home twice. Utilities, food, insurance, and subscriptions still matter for your budget, even when not entered as debt payments here.
How do I know my score?
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You have different scores under different models. A mortgage review can clarify the scores used for your loan.
The 2:1 rule
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This mockup uses income equal to twice housing plus other debt payments: a 50% DTI illustration. It is not a universal requirement, approval rule, or spending target.
Planning estimates only. Starting rate is an example, not a current quote. Original calculator assumptions and help text are unchanged. Program thresholds and mortgage insurance estimates are planning guides. Add verified licensing disclosures before publishing. Income ratio and credit score definitions: CFPB.