What is ‘Qualification Ratio’
Ratio of debt to income and housing expense to income that is used by mortgage lenders to determine a borrower’s credit-worthiness for certain loan amounts. Generally, a borrower’s debt-to-income ratio, which includes housing expenses plus long-term debt, cannot exceed 36% of the person’s monthly gross income. Housing expenses alone, which include home owner’s insurance, taxes, condominium fees, homeowner’s fees, etc. cannot exceed 28% of a borrower’s monthly gross income.
Explaining ‘Qualification Ratio’
Mortgage programs are available for borrowers who do not meet the standard qualifying ratios, but the added risk of default by the borrower means that such mortgages generally carry higher interest rates than mortgages where the standard qualifying ratios are met.
Further Reading
- Predicting audit qualifications with financial and market variables – www.jstor.org [PDF]
- Audit qualification, firm litigation, and financial information: an empirical analysis in Greece – onlinelibrary.wiley.com [PDF]
- Explaining qualifications in audit reports using a support vector machine methodology – onlinelibrary.wiley.com [PDF]
- Qualified audit reports and costly contracting – link.springer.com [PDF]
- An empirical investigation of audit qualification decisions in the presence of going concern uncertainties – onlinelibrary.wiley.com [PDF]
- Mobility‐Tenure Decisions and Financial Credit: Do Mortgage Qualification Requirements Constrain Homeownership? – onlinelibrary.wiley.com [PDF]
- Using client performance measures to identify pre-engagement factors associated with qualified audit reports in Greece – www.sciencedirect.com [PDF]
- Financial ratios and the probabilistic prediction of bankruptcy – www.jstor.org [PDF]
- Audit qualifications and corporate governance in Spanish listed firms – www.emerald.com [PDF]
