If you are financing any part of your new construction, there are quite a few steps to take before calling a house your home. Specifically related to the finance of the new build, banks will look at two main things to determine the cost of home you are able to afford:
1. Current income
2. Current expenses
These two items will determine your overall debt-to-income ratio, or otherwise referred to as your “DTI”.
Your income will be calculated using your most recent pay statements. The bank will use your gross income (amount prior to taxes). It is required that the loan qualifies using normal income only, and not using any overtime, commissions or bonuses, as these are not guaranteed. You will need to provide recent pay statements as well as tax turns, including W2 forms, for last two years in order to prove the income is consistent.
Identifying your expenses is the second crucial step in financing a new home. Expenses that reflect on your credit report would include auto loans, student loans, credit cards, etc. The bank will also include any alimony or child support payments that are paid monthly. If you co-signed on a loan for another person, it will also be counted towards your debt.
Additional expenses such as utilities (electric, gas, water, sewage), daycare expenses, car insurance, phone/internet, etc. do not count towards your DTI; however, keep in mind that you will still need to be financially able make those payments on a regular basis. Maxing out your finances on your home is not suggested as it would limit your ability to pay for living expenses.
For more information about calculating your debt-to-income ratio or information about the mortgage process, please visit www.farmersnb.com/mortgages or contact Melinda White at 844.226.7523.
Mortgage FAQs: https://farmersnb.mortgagewebcenter.com/Resources
Apply Online: https://farmersnb.mortgagewebcenter.com/
Equal Housing Lender, Member FDIC
About The Farmers National Bank of Emlenton:The Farmers National Bank of Emlenton is an independent, nationally chartered, FDIC-insured community commercial bank headquartered in Emlenton, Pennsylvania, operating 17 full-service offices in Allegheny, Butler, Clarion, Clearfield, Crawford, Elk, Jefferson, Mercer, and Venango Counties, Pennsylvania and Hancock County, West Virginia. The Bank is a wholly owned subsidiary of Emclaire Financial Corp (NASDAQ: “EMCF”). For more information, please visit the website at www.farmersnb.com or call 877-862-9270.