How do home loans work with your available credit?

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When you check your credit score or report it shows that you have so much debt and then it shows available credit you have left if you were to get like a car loan or school loan. So how does a home loan fit into that. Do they go by that available credit or what they expect it to be within the regular 30 year mortgage period?

  1. Reply
    May 4, 2011 at 12:52 am

    No – home mortgages are viewed differently from unsecured consumer debt like credit cards.

  2. Reply
    Alan W
    May 4, 2011 at 1:16 am

    Available Credit is what you have open but are not using. Like if you have a credit card with a limit of $ 1000 and you have $ 300 on it you would have $ 700 available credit.

    For home loans we look at the last two years and we try to predict out three years. We ask questions like do you expect this income to continue?

    We take your gross income (before taxes) and take 45% of it, then we subtract your debts (bills) to find out what your max payment can be.

    Hope this helps Good Luck,

  3. Reply
    May 4, 2011 at 1:40 am

    Available credit? An individual credit account has available credit. When we look at available credit, we’re trying to see if you live within your means. If you have $ 100,000 in credit lines and you’re using $ 90,000 of that, you use credit indiscriminately. To us, you don’t have the maturity to handle credit, and we’re not giving you any more.

    Who knows what will happen over the next 30 years. We look at your history because we can’t predict the future. Your income now, your reserves, etc.

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