MBA CRU cheat sheet
MBA CRU · Keep the key ideas within reach.
Residential Underwriting
Qualifying ratio limits for conventional loans: housing ratio (PITI / gross monthly income) generally capped at 28%, total debt ratio (PITI plus all monthly obligations / gross monthly income) generally capped at 36%; FHA commonly allows 31% housing and 43% total with compensating factors.
PITI = principal + interest + property taxes + hazard insurance; add mortgage insurance premiums, HOA dues, and special assessments to reach the full housing payment used in ratio calculations.
Gross monthly income for salaried borrowers = annual base salary / 12; overtime, bonus, and commission income typically require a 2-year history and averaging, with declining trends treated cautiously or excluded.
Self-employed borrowers: qualifying income uses the 2-year average of adjusted gross income from returns, adjusted for nonrecurring items, depreciation add-backs, and business-use-of-home deductions.
Maximum conventional loan-to-value is 97% for a primary residence with mortgage insurance; 95% for second homes; 85% for 2-unit properties; 75% for 3-4 unit properties; investment properties generally cap at 85%.
Total debt ratio includes minimum credit card payments (typically the greater of the stated minimum or a percentage of the balance), auto loans, student loans, child support, and alimony; installment debt with 10 or fewer payments remaining may be excluded.
Reserves requirement is measured in months of PITI: commonly 2 months for primary residences, 2-6 months for second homes, and 6 months for investment properties, with additional reserves required for multiple financed properties.
Credit score tiers drive pricing and LTV caps; a mid-score is used for multiple-borrower files, and the lowest mid-score among borrowers generally controls eligibility and pricing adjustments.
Documentation hierarchy: full documentation (W-2s, pay stubs, tax returns), alternative documentation, and stated income; most agency programs require income verification through tax transcripts and written or verbal verification of employment.