I had a long fact-finding discussion with Kenneth Lemus.

• 1. credit quality

https://tanbinvest.dreamhosters.com/2017/05/06/credit-score-tipsccards/ has his input on credit score.

Beside credit score, as a standard practice mortgage lenders look at 12M rent history. #1 show payment receipts #2 show lease agreement or a letter (signed by both parties) explaining there’s no written agreement.

• 2. income. They need YTD payslips + last 2 tax returns. (they take the mean.) They only care about pretax income.
• 3. Expenses. Expense-to-income ratio — 43%. I think lenders only look at your mortgage-related expenses
  1. mtg monthly amt
  2. pTax
  3. mtg bx — can be negotiated. Possible discount if you combine it with car insurance.
  4. PMI — Kenneth said to avoid PMI you need to make 20% down payment, or pay down the outstanding amount to below 80% (if you don’t have the 20% free cash initially). As soon as your equity reaches 20% PMI stops.
  5. condo fees if any
  6. —-
  7. household expenses? They can’t assess
  8. Overseas mortgage? not a concern to lenders.

Lenders also look at last 60 days bank statements. Any big income or expense will be questioned

I gave an example of a 300k SFH. 240k loan. Based on 3%, the monthly is $1011. Property tax is estimated at $7k/year for SFH ($4k estimated for a condo). Mtg bx is estimated at $100/m. Total 1700/m. Even with other debts added, it’s way below 43%

If you buy an “investment” property, the lender would look at everything above + your rent expense

• 4. mortgage rate

30Y fixed is most popular. However, if you plan to pay off in a few years you can consider 5Y fixed + 25Y variable. The initial fixed rate will be lower.