If you are applying for a home mortgage loan, in that case, there are lots of different types of formalities that need to be fulfilled. Different types of verifications are carried out by the agencies. Income verification is one of the most crucial among them. When it comes to income verification, it is not just about a couple of pay slips. You will have to establish the fact that you have a stable income. While making the down payment, you will be also asked to show the source of your income as well.
Have you graduated recently and started a job with a decent salary? Have you switched your career or started a new venture? All these things would be useless unless you can substantiate that you have a stable earning. If you are looking for the best refinancing rates, in that case, the stability of your earning and the source of it are the two important aspects that are taken into consideration.
What income requirements are essential to apply for a mortgage?
It needs to be mentioned right at the outset that it is not about how much you are earning. But, it is all about how much of your total earnings you can spend on your different debt payments and home loan. A rule of thumb is that you’re total monthly payments for mortgage, which include homeowners insurance and property taxes should not be more than 28% of your gross total income.
When it comes to your total debts, which include any sort of loan and credit cards; shouldn’t be more than 36%. These are known as debt to income ratios.
A Calculator can be of great help
When it comes to calculating all these percentages and ratios, it can be quite a complicated process. As a layman, you might find it quite difficult to figure out the exact amount in terms of percentage as well as a ratio. This is where a Mortgage calculator comes into the picture. It is a specially designed mechanism, which helps you find all the required and essential data that are needed.
In the end, it needs to be stated that, the chances of you qualifying for a mortgage loan depends on your credit score and the stability of your income. Various other factors are taken into account; however, these are the two most crucial elements which are scrutinized by the agencies very closely. Therefore, if you are planning to go for a mortgage loan, you need to make sure that you have taken care of these two aspects.