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Milligram's response was excellent. I'll just quibble with the last remark, that income has nothing to do having credit extended. It is in fact the first filter I use in underwriting. If the applicant can't afford the payment, many lenders will not make the loan regardless of credit quality.

The four C's of underwriting are capacity, character, collateral and commitment. Most lenders do not want to see total monthly obligations exceed 50% of gross income. Conservative lenders, and yes there are still a few of them, want total outgo below 40%.

Good post, Milligram.
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