So, what's a good debt/income ratio?

bigbet1234 · Aug 5, 2004

This board is so full of knowledge, let's get a few answers to this question.

I run a small marketing firm from home. I bring in about $110,000.00 a year. Operating expense runs about $50,000. So I net about $60K a year.

Our bills are a total of $2200 a month, is this a decent ratio? We will be looking at homes at the begining of the year.

Thanks

THE SHRINK · Aug 5, 2004

It all depends what you will be paying for your home and what interest rate you will be getting...

On the surface, I would say you are doing pretty good...

Ken

stjgobraves39 · Aug 5, 2004

I would say that if you lived here in CR thats a pretty damn good income...but if you live in the state making that..i'd have to say you're making ends meet depending where you live.

wantitall4moi · Aug 5, 2004

I hope you don't live in California.

RPM · Aug 5, 2004

if 60,000 is your gross income before paying taxes, than you are not doing so well. you are currently OVER 40% on your debt/income ratio.

you should seriously consider paying some bills off before applying for a mortgage.

im also basing this on the idea that your current home bills are not included in that $2200 per month. debt to income ratios do NOT count bills such as electric, phone, cable, etc.

only car payments, credit card bills, student loans, and things like that count.

mortgage companies will prefer you are at or below the 32% mark. some of the more aggressive companies will accept 36% and less.

hope this helps.

Journeyman · Aug 5, 2004

Most places that income would hold up fairly well...low bills is key IMO...most people waste so much money on BS its ridiculous!

depending on if BigBet has a family or a spouse earning money is also a factor

bigbet1234 · Aug 5, 2004

Well, with car, credit card and student loan it is only $385 a month. The $2200 a month is all bills, electric, cell, rent, insurances, spending, grocery, etc...<BLOCKQUOTE class="ip-ubbcode-quote">quote:<HR>Originally posted by RPM:
if 60,000 is your gross income before paying taxes, than you are not doing so well. you are currently OVER 40% on your debt/income ratio.

you should seriously consider paying some bills off before applying for a mortgage.

im also basing this on the idea that your current home bills are not included in that $2200 per month. debt to income ratios do NOT count bills such as electric, phone, cable, etc.

only car payments, credit card bills, student loans, and things like that count.

mortgage companies will prefer you are at or below the 32% mark. some of the more aggressive companies will accept 36% and less.

hope this helps. <HR></BLOCKQUOTE>

bigbet1234 · Aug 5, 2004

no family, just a wife. and if she keeps her shit up, i will be single!

<BLOCKQUOTE class="ip-ubbcode-quote">quote:<HR>Originally posted by Journeyman:
Most places that income would hold up fairly well...low bills is key IMO...most people waste so much money on BS its ridiculous!

depending on if BigBet has a family or a spouse earning money is also a factor <HR></BLOCKQUOTE>

Tico · Aug 5, 2004

Here's a link with lots of resources that can help you.... take a close look at the "calculators" section.

http://money.cnn.com/

RPM · Aug 5, 2004

<BLOCKQUOTE class="ip-ubbcode-quote">quote:<HR>Originally posted by bigbet1234:
Well, with car, credit card and student loan it is only $385 a month. The $2200 a month is all bills, electric, cell, rent, insurances, spending, grocery, etc <HR></BLOCKQUOTE>

based on $385 per month, your debt to income is excellent. you should have no problems.

also, before applying for a loan, i recommend you pull all 3 of your credit reports WITH SCORES. it will cost you about $39 at www.myfico.com and will save you a ton of money in the long run. if you have any problems with your credit reports or scores, let me know, ill be glad to teach you how to fix your credit.

you want your middle score to be at least 680 or higher before you apply for a mortgage.

stjgobraves39 · Aug 5, 2004

So in reality you make much less than that...

Married: That means she gets half

Posting on this site: That mean you gamble

Id say you're closer to 15K A year...

Mom's basement is looking pretty good right now, right??

bigbet1234 · Aug 5, 2004

Say what you must!

<BLOCKQUOTE class="ip-ubbcode-quote">quote:<HR>Originally posted by LongIslandTico:
So in reality you make much less than that...

Married: That means she gets half

Posting on this site: That mean you gamble

Id say you're closer to 15K A year...

Mom's basement is looking pretty good right now, right?? <HR></BLOCKQUOTE>

stjgobraves39 · Aug 5, 2004

Relax bro..im just goofin around

bigbet1234 · Aug 5, 2004

oh, yeah, i forgot, my mom doesn't have a basement, she lives in a trailer<BLOCKQUOTE class="ip-ubbcode-quote">quote:<HR>Originally posted by LongIslandTico:
So in reality you make much less than that...

Married: That means she gets half

Posting on this site: That mean you gamble

Id say you're closer to 15K A year...

Mom's basement is looking pretty good right now, right?? <HR></BLOCKQUOTE>

bigbet1234 · Aug 5, 2004

so am i

<BLOCKQUOTE class="ip-ubbcode-quote">quote:<HR>Originally posted by LongIslandTico:
Relax bro..im just goofin around <HR></BLOCKQUOTE>

bigbet1234 · Aug 5, 2004

Thanks RPM, I will keep that in mind when I start pulling everything together.

also, does it matter how long you have been self-employeed?<BLOCKQUOTE class="ip-ubbcode-quote">quote:<HR>Originally posted by RPM:
<BLOCKQUOTE class="ip-ubbcode-quote">quote:<HR>Originally posted by bigbet1234:
Well, with car, credit card and student loan it is only $385 a month. The $2200 a month is all bills, electric, cell, rent, insurances, spending, grocery, etc <HR></BLOCKQUOTE>

based on $385 per month, your debt to income is excellent. you should have no problems.

also, before applying for a loan, i recommend you pull all 3 of your credit reports WITH SCORES. it will cost you about $39 at http://www.myfico.com and will save you a ton of money in the long run. if you have any problems with your credit reports or scores, let me know, ill be glad to teach you how to fix your credit.

you want your middle score to be at least 680 or higher before you apply for a mortgage. <HR></BLOCKQUOTE>

RPM · Aug 5, 2004

bigbet,

a lot of things will revolve around your credit scores. one of them is your being self employed.

for instance, you can get a NO INCOME VERIFICATION LOAN if your credit score is in the 700's. then you dont have to worry about the debt to income or anything.

pull those scores soon. if there are problems, it will take a couple months to fix them.

btw, the bengals suck!~ (except for their coach.)

go ravens!~

bigbet1234 · Aug 5, 2004

My wife has a bankruptcy on her report from about 3 years ago. How do you go about clearing that up?<BLOCKQUOTE class="ip-ubbcode-quote">quote:<HR>Originally posted by RPM:
bigbet,

a lot of things will revolve around your credit scores. one of them is your being self employed.

for instance, you can get a NO INCOME VERIFICATION LOAN if your credit score is in the 700's. then you dont have to worry about the debt to income or anything.

pull those scores soon. if there are problems, it will take a couple months to fix them.

btw, the bengals suck!~ (except for their coach.)

go ravens!~ <HR></BLOCKQUOTE>

bigbet1234 · Aug 5, 2004

Bengals use to suck, but they are making the turn around 3rd and heading home<BLOCKQUOTE class="ip-ubbcode-quote">quote:<HR>Originally posted by RPM:
bigbet,

a lot of things will revolve around your credit scores. one of them is your being self employed.

for instance, you can get a NO INCOME VERIFICATION LOAN if your credit score is in the 700's. then you dont have to worry about the debt to income or anything.

pull those scores soon. if there are problems, it will take a couple months to fix them.

btw, the bengals suck!~ (except for their coach.)

go ravens!~ <HR></BLOCKQUOTE>

RPM · Aug 5, 2004

cant get the bankruptcy off, but knowing that, i garuntee there are things that can and NEED to be fixed.

also, if your wife has no income, you may be better off getting the mortgage without her on it.