Debt-to-Income and Housing Ratios

The video tutorial explains how to calculate three key mortgage qualifying ratios: housing ratio, loan-to-value ratio, and debt-to-income ratio. It provides step-by-step examples for each ratio, highlighting their importance in mortgage approval. The housing ratio measures the percentage of income spent on housing payments, while the loan-to-value ratio compares the loan amount to the home's value. The debt-to-income ratio considers all monthly debts relative to income. Each ratio has specific thresholds that lenders consider favorable for mortgage approval.

What are the three main qualifying ratios discussed in the video?

• Housing ratio, loan-to-value ratio, debt-to-income ratio

• Interest rate, down payment, credit score

• Principal, interest, taxes

• Loan term, interest rate, property value

What does the housing ratio represent?

• The proportion of income dedicated to housing payments

• The total amount of the loan

• The total value of the home

• The interest rate on the mortgage

What is considered an acceptable housing ratio?

• Less than 28%

• More than 50%

• Exactly 30%

• Between 40% and 50%

How do you calculate the housing ratio?

• Divide mortgage payments by monthly income

• Multiply mortgage payments by monthly income

• Subtract mortgage payments from monthly income

• Add mortgage payments to monthly income

In the example, what is Shari's housing ratio?

• 35.00%

• 28.00%

• 30.00%

• 25.14%

Why is it important to have a favorable housing ratio?

• It indicates the borrower's ability to manage housing costs

• It determines the interest rate on the loan

• It affects the property's appraised value

• It influences the loan term

What does the loan-to-value ratio measure?

• The borrower's credit score

• The loan amount compared to the home's value

• The interest rate on the loan

• The total monthly payment

What is considered an acceptable loan-to-value ratio?

• Less than 80%

• More than 90%

• Exactly 85%

• Between 70% and 90%

How is the loan-to-value ratio calculated?

• Subtract the loan amount from the appraised value

• Multiply the loan amount by the appraised value

• Divide the loan amount by the appraised value

• Add the loan amount to the appraised value

In the example, what is the loan-to-value ratio for the home purchase?

• 85.0%

• 70.2%

• 80.0%

• 90.0%