👉 Mortgage computing is the process of determining the amount of a loan a borrower can afford based on their income, creditworthiness, and the property's value. It involves complex calculations to assess the borrower's ability to repay the loan over time, typically using a formula that considers factors like the loan-to-value ratio (LTV), debt-to-income ratio (DTI), and the property's monthly mortgage payment. The LTV ratio compares the loan amount to the property's value, indicating how much of the home is financed versus purchased; a lower LTV is generally safer for lenders. The DTI ratio evaluates the borrower's monthly debt payments relative to their gross income, ensuring they can manage other financial obligations alongside mortgage payments. By analyzing these metrics, lenders compute an appropriate interest rate and loan term, balancing risk with the borrower's affordability. This process ensures that mortgages are both accessible to borrowers and sustainable for lenders, maintaining the stability of the housing market.
