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I am trying to build a modular home on my property. The property(land) value is $6,000, I have $600 of monthly debt and I make $60,000 a year. Between land equity and cash I plan on putting down $10,000 for a downpayment. And my credit score is a 680. What would be the max amount I could get approved for? Thanks in advance for your insight.
50% of monthly income = $2500, BUT in your case we need to worry about the Housing ratio. This is the house payment, with taxes and insurance included, divided by monthly income. The tendency here is to keep this under 45% if not lower.
Housing Ratio: We will use 45% for an example. 45% of $5,000 = $2,250 max house payment.
Total debt ratio: 50% of $5000 = $2500 - $600 monthly debt = $1900 est. max house payment.
So about $1900 including 1/12 of the yearly property tax bill plus 1/12 of the homeowners insurance premium plus monthly mortgage insurance.
Need data on taxes and insurance before we can reverse-engineer a loan amount. Then we will look at the max loan amount and how much the $10,000 down payment represents, in the form of a down payment. Then we will calculate Mortgage insurance, and further compress the loan amount, because that is another monthly debt that must be added to the payment.
Also if you are planning to do a construction loan for the modular unit, then those interest rates tend to be a bit higher so that will impact your total approval amount.
Thank you for the replies! I forgot to mention I will doing the Section 184 loan for Native Americans. Here are some highlights:
PMI of .25% of loan amount
1.5% upfront guarantee fee financed into the loan
Just because you qualify for a certain amount does not mean you SHOULD borrow that much. You have to be honest about what sort of payment you’re comfortable with. If you’re paying $750 in rent right now, and barely squeaking by, don’t take on a $2,000 house payment, even if you qualify for that much.
Right! I only want to borrow between $200,000-$220,000.
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