Answer:
All lenders have different underwriting standards, but traditionally, the housing debt-to-income ratio has been 25-28%, with a total debt-to-income ratio of 33-36%.
Explanation:
A lender is any individual or financial institution that avails funds to another party, usually the borrower with the belief that it will be repaid in a specified duration. The purpose for lending can be different, for example; it can be as a small business loan, mortgage or automobile loans. The repayment always depends on the agreement made, but usually includes the interest the loan has accrued. The repayment can also be periodic, for example monthly or annually or can be a lump-sum amount at the end of the loan duration.
Underwriting standards are rules and regulations usually formulated by the banks to determine credit access. The standards help in establish if an individual has access to a loan, how much of the loan they can access and the interest rates of the loan. Other financial attributes like the housing debt-to-income ratio and the total debt-to-income ratio are also used to assess one's viability for a loan. These parameters always look at an individuals possibility of repaying the loan. A higher possibility of repayment usually means a higher possibility of accessing the loan. Traditionally, the housing debt-to-income ratio has been 25-28%, with a total debt-to-income ratio of 33-36%.
