Qualifying for a mortgage is a calculation of your total gross income x 28% or your total gross income x36%-debts, typically. The lender uses which ever is lower, this is the maximum allowable amount available for P&I (Principle and Interest payment). Then take into consideration the annual home owners insurance and annual property taxes. This will be the maximum allowed for your entire monthly payment or PITI (Principle, Interest, Taxes and Insurance)

A calculation is made based on the interest rate to arrive at the maximum loan amount you are qualified for.

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Date updated: 10/13/2009