Your income, credit history and down payment are the three most important factors that a lender will use to determine your eligibility for a loan. In short, a larger salary, better credit and a significant down payment help to qualify for a larger amount of money with a better interest rate. However, research in advance will help you determine not only the quantity that you can qualify, but it really can pay.
mortgage loans
The loan amount you qualify for depends less on your salary and how much of that is what you are planning to invest in a home. Most owners plan to buy a house worth two and half times their annual salary before taxes. Lenders consider the percentage of your salary before taxes when they approve a loan application; most consider FHA guideline of 29 percent is a reasonable amount to spend. For example, if you earn $ 100,000 per year, you can spend up to US $ 29,000 per year in housing. This includes principal, interest, taxes and insurance, and is equal to about $ 2,400 per month. Note that this is the maximum amount you can spend, other significant additional factors affecting this number, including your credit and how many other debts have.
student Loans
While mortgage loans have strict rules that subscribers continue to determine eligibility and affordability, student loans have much more flexible "rules". Because student loans do not start the repayment period until after the student completes his studies, these loans require the applicant to consider how much you expect to earn in the future, and by extension, how much salary you will pay for the loan . Loan officers follow two golden rules. The first is that a student should not borrow more than their total expected income before taxes in the first year. The second is that the loan should not be more than 8 percent of your gross income. These calculations assume that the student has no other debts, such as high balances credit cards or car loans.
Auto loans
As in mortgage loans, car loan payments require the borrower income and savings consider before deciding how much to spend. The difference is that it is easier to spend much money on a car. The rule of thumb is that no more than 20 percent of net income (after taxes) should be spent on a car payment, according to Automotive.com website. For example, if your net pay is $ 5,000 per month, you should not spend more than $ 1,000. Remember that cars require more than fuel; maintenance and insurance are necessary expenses can cost hundreds of dollars or more per year.
Factors affecting funding
Note that the salary is only one of three critical factors that a lender considers when reviewing your loan application. If you have a bad history of repaying loans even if you are approved your interest rate can be prohibitive; a rate higher interest means you can not spend as much on capital. The amount of down payment also matters; mortgage loans are particularly sensitive to the initial payment. At the time of publication, if you do not pay in advance at least 20 percent, you should be prepared to pay mortgage insurance. This insurance can cost hundreds of dollars a month and is included in the payment of housing. If you are a student, beware; an expensive education in a private school can be difficult to manage after graduation, especially if you're considering a moderately compensated profession.
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