20% down with debt or 10% down with no debt?

[OCMan_IHB]

Lendingmaestro, Irvine Renter or other loan, financing experts,



For case a) the total monthly debt to income ratio is still under 34%. Either case FICO is over 750 and annual income is little shy of $175k. If the housing price come down another 15 to 20% this year as some experts forecast, then 20% down with no debt is possible I guess...



Please give me some feedback on how lenders look at these different cases differently and why one is better than the other.



I'm trying to set my personal finance in better shape for possilbe purchase in late 2008 or early 2009 but as I mentioned in another topic thread, I still think the price level is way too high... Thanks.

 

[OCCOBRA_IHB]

There are 2 ratios, front and back. The front is the house payment vs gross income and the back is house payment and revolving debt. It depends on the loan on ratios. Conforming is usually 28/ 36 (This will vary to some degree) but if you put more down, 20% and have good credit you can push those ratios. Once people put 20% down the chance of a person walking away is almost non existent since they have so much invested in the home. Personally i would shoot for 20% down as you will get rid of Private Mortgage Insurance, PMI. You can figure at least 3 times your gross income as the price point of the home you can buy. With 20% down that may be as high as 4. As long as your credit is 680 or higher Fico numbers higher than that will not matter. Those people that think they need high FICO's where for people who needed more aggressive loans like 100% or stated loans (No Doc loans) but those have gone the way of the dinosaurs....