Home Loans In Anchorage Alaska 

Welcome to Capital Home Mortgage Anchorage. Known as “The City of Lights and Flowers,” Anchorage is Alaska’s most populous city and home to nearly 40% of the state’s population. 

With its natural beauty and ability to attract explorers and mountaineers worldwide, Anchorage continues to see more people coming to the city, some for good. Life in Downtown Anchorage is vibrant and lively. The housing market is also quite active, especially during summer. 

If you’re planning on buying a home in Anchorage, Alaska, you might need to obtain a home loan. Unless, of course, you have a more convenient way to pay for the property. Capital Home Mortgage can help. 

One of the most critical considerations in the loan process is the debt-to-income (DTI) ratio. Let’s talk about what this is all about and why lenders are so particular about it.

Understanding DTI Ratio For Loan Applications In Anchorage

Your DTI is the percentage of monthly gross income that goes to your monthly debt payments. Lenders use the DTI to determine if you have enough income to cover all your debt and assess the risk of extending financing. 

Computing the DTI

The DTI ratio is a risk metric lending companies use to assess whether they approve or reject your loan. Moreover, it will play a part in determining the interest rate of your mortgage loan. There are two (2) DTI ratios to consider: (a) front-end and (b) back-end ratio. The front-end ratio is the relationship of your income to the proposed housing expense. The back-end ratio is the relationship of your income relative to all your debts, PLUS the proposed housing expense.

Determine the total monthly mortgage payment for your front-end ratio, including the principal, interest, taxes, and insurance (PITI). If you buy a $200k house and the total PITI is $1,8000, and your income is $5,000 a month, divide the proposed housing expense of $1,800 by your gross income of $5,000.

Here’s your formula for the front-end ratio: Proposed PITI ÷ Gross Monthly Income. In our scenario, $1,000 ÷ $5,000 = 36%

Here’s how you can compute your back-end DTI: DTI = Monthly Debt Payments + Proposed PITI ÷ Monthly Gross Income

Your monthly debt payments include credit card debt, existing loans, mortgages, and other financial obligations. In computing your monthly gross income, add all your pre-tax and pre-insurance income (e.g., compensation, business income, passive income, etc.).

For example, let’s say your monthly debt payments amount to $500, and your proposed monthly PITI is $1,800; both total $2,300 if you earn $5,000 a month gross income. $500 + $1,800 = $2,300 ÷ $5,000 = 46%

DTI Limits

According to the Bureau of Consumer Financial Protection, a healthy DTI, in general, is within 36% and 43%. 

This means borrowers should maintain a 36% DTI and stay below 43% to qualify for a mortgage. However, maximum DTI depends upon the loan program you wish to be eligible for, and it varies from lender to lender. Conventional loans may go up to 45%, whereas FHA loans may go all the way to 57% with compensating factors. 

To increase your chances of getting a mortgage with favorable terms, you’ll need to keep your DTI as low as possible. 

Anchorage, Alaska Mortgage Lender 

The DTI ratio is just one of the many financial metrics lenders use to assess your creditworthiness. Overall, the loan process can be a bumpy road, especially if this is your first time obtaining a loan of this magnitude. 

Working with an experienced Anchorage mortgage lender like Capital Home Mortgage can ensure a smoother process, from pre-qualification to funding. 

Our Alaska mortgage experts will walk you carefully through the eligibility requirements and expected application timelines. 

As a direct mortgage lender, we offer competitive interest rates, low fees, and exceptional customer service all the way. Additionally, Capital Home Mortgage oversees the entire loan process, making our underwriting and processing time faster and more straightforward. 

Get A Home Loan In Anchorage

Let’s help you get on your way to being a proud homeowner in Anchorage, Alaska. Talk to our loan officers at Capital Home Mortgage about your home loan needs today. Whether you’re a first-time borrower or a seasoned investor, we can match you with the right mortgage product for your needs. 

Contact us at (907) 531-5048 to get started.