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The Mortgage Loan Qualification Calculator will allow you to calculate the maximum home loan amount for which you qualify, based on your current income and expenses. By using this tool, you will:

Hi folks this is a how-to video for using the mortgage loan qualification calculator from thin crafters this is a free tool you can access from the fin crafters comm website you can use this calculator to figure out how much home loan you can qualify for a certain purchase or you can figure out what the maximum home you can purchase with a twenty percentage downpayment

This is based on the california market the constraints for other markets could be slightly different we are going to run through a few different scenarios here starting with a townhome purchase the blue cells here are the input cells the green cells are the outputs all the income items are captured here on the liability items are down here so say for a person who’s

Making one hundred sixty thousand dollars in annual income you may be able to include bonus as part of this number especially if there is history for a townhome it’s not a multi-unit property so you can leave this blank back and ratio is very important so it is the all the debts added together over income so if that debt includes the mortgage the new mortgage also

So if that is constrained to 43 percentage so what that means is the income multiplied by point four three factor comes to an adjusted income off this number and all the liability taken together cannot exceed the adjusted income figure alright next let’s walk through the different liability items the first one is monthly payments so this includes items like your

Car payment student loan payment alimony child support any structured credit card payments etc so for this example i’m gonna use a 500 number and the townhome let’s say costs eight hundred and fifty thousand dollars banks like to use a small number for home insurance so say one hundred bucks let’s say the hoa is about four hundred it’s a interest rate offered by the

Bank is about four percentage so these are the different inputs now let’s look at the different outputs generated a pni is your monthly mortgage payment so that’s your principal and interest portion property tax for california market bank’s user 1.25 percentage rate and then the monthly house payment includes the piti and hoa so that’s your principal interest tax

As in property tax and insurance so that includes the this cell pni and hecho a and home insurance cells all added together next is the front end ratio it is calculated using the mortgage debt over income and if this ratio is in this range 36 to 41 percentage then it could trigger additional checks by the underwriter especially if it’s a jumbo loan so the smaller

This ratio is the better it is for qualifying alright so the next item is the loan amount that’s qualified the model caps the loan amount to 80% hltv our loan to value so in this case this person qualifies for the full 80 percentage loan that down payment is going to be 20 percentage the max home is the maximum home price this person can qualify for with the 20

Percentage down payment so if this person had bought a nine hundred and seventy four thousand dollar property he could have still available a percentage loan so what happens with the property price is more than nine hundred and seventy four thousand dollars so let’s try that scenario out let’s change the price to say 1.2 million so you can see that that has dropped

The loan qualification from the full 80 percentage down to 61 percentage that’s because whenever the property price goes up the property tax portion is gone up and that means it there is a lower budget left for coding the p&i which reduces the loan amount one could qualify for so in this instance for this person to complete this purchase he would have to come

Up with a thirty nine percentage down payment but now we are getting into the single-family price range so for single families usually don’t have a huge hit show a fees so i’m gonna try and eliminate this and then you can see that because this fee is eliminated it will improve the qualification profile just a little bit so when i delete that you can see that the

Qualification now has gone up by seven points so what this means is this person with this income profile can purchase up to a million dollars in a single-family home and get up to 80% aged as loan and and just pay 20 percentage in down payment all right the next stress scenario we’ll walk through a duplex purchase so say it’s a duplex and one portion is rented out

It’s bringing in say $2,500 in monthly rent and the other portion is occupied by the owner qualifying this home purchase as a primary home banks use a 75 percentage occupancy rate so if the rent would have to be discounted as shown here still it it would have improved the overall income profile the duplexes are going to be more expensive because it’s essentially

Buying two joint homes so to be realistic let’s change the price to 1.6 million you can see that by doing so the qualification has dropped even further down to 56% age on the max loan amount is 1.2 million dollars so if this person can purchase a 1.2 million dollar duplex home and just put down 20% page are if if the home price is more than 1.4 million dollars in

This case 1.6 million dollars then only 56 tej can be availed as loan and 44 percentage would have to be the down payment a quick disclaimer this calculator provides a quantitative estimate for mortgage loans however underwriters also use qualitative guidelines which can increase or decrease this estimate you can access this calculator from the website fan crafter’s

So if you go down to the tools and resources section there’s a couple of calculators listed there you can you can access it from there or you can download the fin crafter’s app on the retirement calculator as well as the mortgage loan qualification calculator are parts of it hope this was helpful and thanks for listening

Transcribed from video

How to Use FinCrafters Mortgage Loan Qualification Calculator By FinCrafters