Calculated Industries 3416 User Guide - Manual (Page 13)

8 — M
ORTGAGE
Q
UALIFIER
P
LUS
®
Qualifying Keys
q (Qualify Based on 28%-36%) — A multi-function
key which, based on entered variables, performs the
following pre-qualifying functions:
1) Stores income and debt ratios for loan quali-
fying. Ratios are entered using the Colon
: key
(Income Ratio : Debt Ratio). For example, income
and debt ratios of 28% and 36%, respectively, are
entered and permanently stored as follows:
2 8 :
3 6 q . Default income and debt ratios for this
key are 28% and 36%, respectively. You may
change qualifying ratios, if desired.
What are Qualifying Ratios?
The income ratio calculates the allowable percent-
age of income for the total housing payment, while
the debt ratio finds the allowable percentage of
income for the total housing payment, plus long-term
debts (usually 12 months or longer). The conserva-
tive rule is that total housing expenses should be
28% or less of income, while total housing expense
plus monthly debt should be 36% or less of income.
INCOME RATIO =
TOTAL HOUSING EXPENSE
GROSS MONTHLY INCOME
DEBT RATIO =
TOTAL HOUSING EXPENSE + MONTHLY DEBT
GROSS MONTHLY INCOME
Note: Typically, when figuring government loans (FHA/VA), these
formulas also include estimated expenses for maintenance and
utilities (added to the Total Housing Expense for both ratios).
Also, real estate financing and qualifying varies per region and by
lender, who of course, take other factors into consideration, such
as a buyer’s credit and employment history.
(Cont’d)