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Home Loans: What You Need to Know About Mortgages 
 
by J. Edward Casteele July 08, 2005

Qualifying for a Mortgage

In order to get a mortgage, you need to qualify first. Most lenders require you to have what is called a debt-to-income ratio of 28/36, meaning that no more than 28% of your income can go toward your mortgage payment and no more than 36% of your income can go toward your total monthly debts (including all other loans, credit cards, and your mortgage payment.) If you don’t have at least 64% of your gross monthly income to spend on food, taxes, and other expenses, then you might want to consider saving up some more money so that you can make a larger down payment (thus reducing your mortgage payments.)

Once you’ve cleared the 28/36 hurdle, you’ll need the following to take with you for your mortgage application:

  • The amount of your down payment (making sure you have enough left over to cover closing costs)
  • Sales contract signed by both the buyers and sellers of the property
  • Social security numbers of all applicants
  • Complete addresses for all applicants for the past 2 years (including names and addresses of landlords)
  • Listing of all employers and all income earned for the past 2 years
  • W-2 forms from the past 2 years
  • Current pay stub showing year-to-date earnings
  • Banks and account numbers for all bank accounts, including loans, credit cards, checking and savings accounts, and any stocks, bonds, or certificates of deposit
  • 3 months worth of your most recent bank statements
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