What Is Debt-to-Income Ratio?
Your debt-to-income ratio (DTI) is the percentage of your gross monthly income that goes toward qualifying monthly debt payments. In simple terms: DTI = Monthly Debt Payments ÷ Gross Monthly Income × 100 For example, suppose you earn $6,000 per month before taxes and have $2,100 in qualifying monthly debt payments. Your DTI would be: […]
What Is an FHA Loan?
An FHA loan is a mortgage insured by the Federal Housing Administration. FHA loans are offered by private lenders that participate in the FHA program. The FHA insurance helps protect lenders against certain losses if a borrower defaults. One of the main attractions of FHA financing is its relatively flexible qualification requirements. Eligible borrowers may […]
What Is a Down Payment?
A down payment is the portion of the home’s purchase price that you pay upfront rather than borrowing from the lender. For example, suppose you purchase a home for $300,000 and make a 10% down payment. Your calculation would be: $300,000 × 10% = $30,000 You would pay $30,000 toward the purchase price and potentially […]
Who Is Considered Self-Employed?
Mortgage lenders may consider you self-employed if you own a business or work independently rather than receiving a traditional employee paycheck. Examples can include: The exact treatment of your income depends on your business structure and the type of documentation available. Can Self-Employed Borrowers Qualify for a Mortgage? Yes. Self-employed borrowers can qualify for many […]
What Is a Credit Score?
A credit score is a numerical representation of information in your credit history. Lenders use credit scores to help assess how likely a borrower is to repay debt as agreed. Credit scores are generally calculated using information such as: The higher your score, generally, the stronger your credit profile may appear to lenders. However, lenders […]
What Is FHA Mortgage Insurance (MIP)?
FHA Mortgage Insurance Premium (MIP) is a required mortgage insurance cost for most FHA-insured mortgages. FHA MIP is different from homeowners insurance. Homeowners insurance generally protects against covered property losses and other insured risks, while FHA MIP is designed primarily to protect the lender against certain losses associated with mortgage default. FHA mortgage insurance generally […]