Manage episode 328378322 series 3336448
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In this episode we talk about the reverse mortgage income requirements.
Reverse Mortgage are different than regular mortgages. Regular mortgage have something called DTI / Debt to Income Ratios. DTI is simply just your monthly expenses that show on your credit report plus housing expenses (like property taxes, HOA dues, homeowner insurance, and mortgage payment). They have to be half or less than half or your monthly gross income. FHA goes a little higher, but were here to talk about the reverse mortgage income requirements, not regular loans.
For reverse, we don't have such tough debt to income ratio requirements. In terms of the reverse mortgage income requirements all we really look at is something called residual income. The amount of residual income required depends on where you live, whether your in the north, south, east or west. It varies, but they are all about the same.
The amount of residual income required also depends on the number of people permanently living in your home.
The residual income requirement ranges from $529 per month to $589 per month in a 1 person household. If you're married, the range is $886 to $998 in terms of residual income. It changes a little bit if there are 3+ in your household, but not that much. The biggest jump is 1 person vs 2 people in the household.
What is residual income? It's basically your housing expenses (there's not mortgage payment with a reverse mortgage) like homeowner insurance, property taxes, and HOA dues, etc. Plus whatever is on your credit report. So, lets say you just have one credit card payment of $50.00 per month and then your property taxes and insurance are $400 per month. Those two items together add up to $450 per month. We also have to add on your estimated utilities payment. FHA just has a formula that is used that is based on the living square footage of your home. On average, it add $150 - $200 but can be higher for larger homes. In this case, lets say it's $150.00. In this case, your expenses are $150 plus $50 plus $400 for a grand total of $600. If you're in a one person household you have to have roughly $550 more in income than that $600 figure (so you'd need about $1100 in income). If you're a two person household you'd need to have anywhere from $886-$998 more depending on where you live.
Hence, the reverse mortgage income qualifications are not too hard to meet. Not every retired person can pass the DTI requirements and certainly many more would meet the reverse mortgage income requirements. The beautiful thing about a reverse loan is that there is no requirement monthly mortgage payment to the bank (but you can make a payment if you want to).
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www.LifeSourceMortgage.com Is not a lender or bank nor are we part of HUD / FHA. We are however a licensed mortgage broker In California, Colorado, and Idaho that specializes in reverse mortgages, fast closing purchase loans, and more. Anyone that inquires and requests more information may be contacted by the owner or employee of this site. LifeSource Mortgage, CA BRE#01869699. NMLS#321759, ID MBL#2080321759.