What is an Affordability Analysis?

Mortgage lenders usually conduct an affordability analysis to determine whether a person can afford a proposed purchase and mortgage loan. Actually, an affordability analysis tends to aim at determining the maximum mortgage loan amount that a borrower can afford.

This analysis typically involves calculating the applicant’s debt-to-income (DTI) ratio, to ensure that the applicant will have enough funds (after making allowances for basic necessities, living expenses and personal debt payments) to pay for the proposed mortgage, taxes and insurance.

For more information, see also the following entries:

• :Back-End Ratio:
• ebt:
• ebt-To-Income Ratio:
• :Front-End Ratio:
• :Hazard Insurance:
• :Liability:
• :Long-Term Debt:
• :Long-term Liability:
• :Monthly Payment:
• rocessing:
• urchase Loan:
• roperty Tax:
• :Mortgage Loan:
• :Qualifying Income:
• :Real Estate Tax:
• :Underwriting: