Why are lenders dividing my income in half

[Steve W]

to qualify for a mortgage? When figuring out my debt to income ratio and how much payment I could afford, my lender said that they would have to divide my income by 2 then substract my monthly expenses to calculate mortgage payment. Is this true? I don't remember this when I got a mortgage 2 years ago.

[Laissez-Faire Guy]

Sounds screwy to me. I know they like to see your mortgage payment be no higher than a certain percentage of your monthly income. Maybe this is their backwards way of doing that.

[heart_and_troll]

Sounds like a backwards way of arriving at the number. Basically, they are unwilling to let you devote all of your income to servicing a mortgage/property tax. They are going to assume you have other expenses (food, clothing, entertainment, travel, car), even if you tell them you have none.

[Swamy]

They assume (rightly or wrongly) that you need a part of your income to take care of your other expenses. They don't want to lend you more and find that you are defaulting.

[Etta P]

Debt to income ratios for are calculated for salaried individuals as follows: your proposed total housing payments divided into your gross monthly income should not exceed 28% for conventional & 29% for FHA for your housing ratio. Total installment, revolving and proposed housing divided into your gross monthly income (not including utilities,gas,water,etc) should not exceed 36% for conventional and 41% for FHA. VA loans use a net adjusted income and can be quite complicated base on different types of income. Also if you are self-employed, all qualifying loan types require 2 complete most recent personal and business tax returns.
I have been in this busines a very, very long time and I have never heard of that calculation your being told by your lender. I have put a couple of websites below that may offer some additional information.
Hope they help

[Nellie S]

Check out this site, I'm sure they have the answer you're looking for.

[dmarie_333]

typically they want only 50% of your income to go to debt, mortgage payment included. that said every bank has their own method of qualifying for mortgages, given the crisis now in the housing market I'm not surprised. I say if your unsure about this lender find another. Go with your instinct.