The ratio that rules the file
Lenders divide your total monthly debts - the new housing payment plus cars, student loans, and card minimums - by your gross monthly income. Most programs approve up to 43-50% depending on compensating factors. That single ratio, not a salary threshold, is what qualifies you.
Work an example
Take an illustrative case. Household income of $9,000/month with $700 of existing debts, at a 45% DTI cap, supports about $3,350/month of housing. Depending on the rate, the property taxes and the insurance, that translates to something in the region of a $420,000-$470,000 purchase with 5% down — the figures move as soon as any of those inputs move. Same income with a $700 car payment and $400 in student loans on top? The budget drops by six figures.
Income lenders can count
Base salary, documented overtime and bonus history (usually two years), self-employment net income, rental income at 75%, and support payments with a track record. Cash income without a paper trail cannot be counted - which is a planning conversation, not a dead end.
Raise your budget without a raise
Paying off a car or consolidating cards often adds more buying power than a salary bump, because the ratio is a fraction and debts sit in the numerator. Every $100/month of debt eliminated adds roughly $15,000-$20,000 of purchase budget at illustrative rates. It is worth running six months before you buy, while there is still time to act on the answer.
The short version
If you remember 4 things.
- DTI, not salary, is the qualifying number.
- Existing debts consume purchase budget at a fierce exchange rate.
- Two-year history turns variable income into countable income.
- Eliminating $100/month of debt adds roughly $15-20k of budget.
Written for a demonstration website. Copperline Home Loans is a fictional company, holds no mortgage license or NMLS identifier anywhere, and cannot lend or advise. This article describes how the mechanics generally work; it is not personalised advice, and no form on this site sends anything to anybody.