Spring 2008

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Jamaica

Guide Volume 3 Issue 1

Serving Jamaica’s Real Estate Marketplace

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Minister of Water and Housing Hon. Dr. Horace Chang Real estate prices in Jamaica, for the most part, reflect marketbased systems of allocation and distribution and tend to point toward underlying disparities in income. Added to this mix, are factors such as proximity to jobs, good schools, low crime rate neighbourhoods and access to high quality amenities all of which tend to drive real estate prices upwards. Those factors pose particular challenges regarding home ownership for low income earners who tend to resort to alternative and illegal strategies such as land capture and squatting. Providing adequate and affordable housing is an issue that has challenged successive administrations over the years. But we need to find ways to address the disparity in housing demand and supply, particularly for low income earners, or face the prospect of an increase in squatter communities, some 600 of which have been identified islandwide so far. In the 2008/2009 fiscal year, the Ministry of Water and Housing aims to provide some ten thousand (10,000) housing starts between the J$1M and J$20M range. These will be facilitated by the National Housing Development Corporation, Joint Venture Partnerships, and the Urban Development Corporation (UDC) with financing from the National Housing Trust (NHT) and the Jamaica Mortgage Bank (JMB). In the past, housing investment programmes have focused on what is required from the public purse to meet demands. But alternative strategies are needed. One such strategy receiving great interest from the Ministry is the Joint

Venture policy through which effective partnerships are formed with the private sector that result in the provision of a range of cost effective housing solutions available to all Jamaicans. Through this Policy, efforts will be made to diversify and legitimize land delivery systems, in order to bring additional lands into the market for development. In addition, communities and nongovernmental organizations will be encouraged to enter into partnerships with public and/or private developers to undertake shelter projects as well as settlement upgrading. More structured options for potential homeowners are also being pursued, for example, build-on-own-land solutions to assist persons to erect homes on land that they already own, as well as open market purchases. In an effort to reduce costs, the Ministry is also in the process of exploring and identifying more affordable construction methods and materials. Underlying all these efforts however, is the need for a comprehensive Housing Policy and a supporting Implementation Plan for the country, which the Ministry is in the process of developing.

Realtors Association of Jamaica

Let me congratulate the management of The Jamaica Real Estate Guide for their vision and creativity in making this bold initiative to change the format of their magazine and to enhance the reach of their publication to all Jamaicans at home and abroad. As the “The Voice for Real Estate”, the Realtors Association of Jamaica is proud to be associated with this publication and we challenge all stakeholders in the Jamaican real estate arena to support this venture, as it inures to the benefit of the players in our real estate industry. In our view, this Real Estate Guide is an important source for improving our real estate marketing opportunities both here and abroad. Real estate is arguably the most important investment decision made by any individual or organisation. As the umbrella organisation for real estate professionals we continue to be challenged by all to

The Preeminent

The Policy will provide strategic direction for Jamaica’s Housing Sector, with its main objective being to facilitate better utilization of resources in the public and private sectors, in order to satisfy the demand for housing in a co-ordinated and economical manner. Everyone wants to own a piece of earth…a place they can call their own. Whether it is land, or a home on that piece of land, having an actual title declaring ownership is one of the most empowering documents a person can possess. Publications such as the Jamaica Real Estate Guide should therefore be commended for its efforts to provide a comprehensive guide to the dynamics of the Jamaican Real Estate Market. The information contained in this periodical, will not only assist potential homeowners, but will also boost our own efforts in realizing the goal of “access to affordable, safe and legal housing solutions for all Jamaicans by the year 2025”.

Real Estate Guide In Jamaica!

Welcome to the Premier Issue of the all new Jamaica Real Estate Guide. While this premier issue is the relaunch of the Jamaica Real Estate Guide, the magazine has a rich heritage. It was conceptualized in 2005 with the intention and mandate to bring the real estate consumer and real estate industry players together. The Jamaica Real Estate Guide brings the real estate marketplace together in a dynamic and simple way by showcasing properties for sale in full colour and an easy to read format. With the all new Jamaica Real Estate Guide you now have in your hand, we provide a more portable magazine that is easier to read and use in your search for Real Estate in Jamaica. Our Stephanie Treasure Editorial Director

provide the highest level of service and to uphold the professional standards expected of our members. Since its inception in 1966, The Realtors Association of Jamaica has always sought to address matters that directly impact the ability of real estate practitioners to conduct their operations in a professional and ethical manner. The constantly changing global economic realities exert significant influences on the development of the Jamaican real estate sector. The future development and prosperity of Jamaica is in our hands and as agents of hope we are optimistic that the increase in foreign and local investments in real estate will help to boost Jamaica’s fortunes and create new employment opportunities and wealth for all. I take this opportunity to encourage the management of The Jamaica Real Estate Guide to continue their drive for continuous improvement in their product and presentation and we wish them all the success in this venture.

 EDWIN D. C. WINT President Realtors Association of Jamaica focus on providing the home buyer with information about everything Real Estate in an attractive format is what makes us the preeminent Real Estate Magazine in Jamaica. In each issue we set out to inform readers about industry trends, tips about the home buying process, financing options and of course the latest real estate properties and developments available. Hopefully you will be able to utilize some of the information we provide in your search and help to make your eventual purchase a hassle-free one. Of course, this entire magazine is also available for viewing on our website plus a host of other resources such as a mortgage calculator, glossary, realtor and developer contacts and more. Sign up for our free newsletter that gets delivered monthly to your inbox and stay on top of the industry news and trends. Log on to our website today at JaRealEstateGuide.com We hope that you enjoy the new Jamaica Real Estate Guide and that it will be your most important resource as you search for your dream home or real estate investment.

M E S S A G E S

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The Jamaica Real Estate Guide is published quarterly by Butterfly Publications, P.O. Box 133, Kingston 19. ISSN 0799-2335 Phone: (876) 905.4587 Fax: (876) 969.2565 Email: [email protected] Website: www.JaRealEstateGuide.com © 2006-2008 Butterfly Publications Volume 3, Issue 1: Spring 2008 Publisher’s Policy

Reproduction of any photographs, artwork or copy prepared by The Jamaica Real Estate Guide is strictly prohibited without written permission from the publisher. All advertised properties are subject to prior sale or withdrawal without notice. Butterfly Publications or The Jamaica Real Estate Guide is not a real estate broker and this publication is not an effort to assist in the buying or selling of real estate but to provide information about real estate listed with a licensed real estate broker. The advertisers, publisher, printer and associates are not liable for misinformation, misprints or typographical errors. Advertising is not accepted from unlicensed real estate sales companies or private home sellers. Real estate advertised in this magazine is subject to the Jamaica Real Estate Board laws. This publication will not knowingly accept any advertising for real estate which is in violation of these laws. Real estate advertised in this publication is available on an equal opportunity basis.

Publisher Butterfly Publications Editorial Director Stephanie Treasure Layout & Design Ultimate Events Miguel Rowe Cover Photo Lennox Quallo Cover Design Sutherland Wade & Associates Website Design www.Blitzwebdesign.com

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Title Insurance to

Boost Real Estate Market The new Title I n s u r a n c e product which was introduced in Jamaica by NEM Insurance Company (NEM) is likely to boost the real estate market, says Paul Cole, JN Group Financial Consultant and the Project Coordinator. He lists among the main benefits a significant reduction in the time required for processing mortgages.

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available for real property, whether or not it has a registered Title. And, we expect that it will revolutionise the way real estate transactions are conducted in this country,” according to Garfield Knight, Chief Executive Officer of Caribbean Title. In Jamaica there are two systems of ownership—the registered title system and the common law title. A registered title is, essentially, a Government guarantee of the accuracy of the ownership of property as stated in the

Paul Cole (left) shares thoughts with Ronald Graham, Chairman of Caribbean Title Limited at the April 15 launch of Title Insurance at the Jamaica Pegasus.

Mr. Knight was speaking on the background of the April 15 launch of Title Insurance by NEM Insurance Company at the Jamaica Pegasus. Title Insurance is issued by an insurance company and guarantees that the title to a parcel of property is clear of any defects. It protects the seller, purchaser and lender of funds against risks in real estate transactions and ensures real property marketability in subsequent sales or transfers. “While it can be used as an option for registered Titles, this type of insurance is of special value to persons without registered titles, who are holding common law titles, conveyances or even only diagrams for their property,” Mr. Cole said. The financial sector is now unable to lend money on common law titles. The new insurance product was brought to the Jamaican market through a joint effort between the NEM Insurance JaRealEstateGuide.com | Page 14

Company, a subsidiary of Jamaica National Building Society (JNBS), and Caribbean Title Limited (CT). NEM offers general insurance services, and has the largest capital base among general insurance companies in Jamaica. The re-insurer for NEM is First American Title Insurance Company, the principal subsidiary of The First American Corporation and the second largest provider of Title Insurance in the United States of America (USA). It is also one of the largest insurance providers internationally, with operations in several countries including Canada, Australia and the United Kingdom. First American is collaborating with CT as one of its first full-service Risk Assessment Providers, to facilitate its involvement in the Jamaican market. “Title Insurance will allow us to provide a standardised and streamlined real estate transaction process with which the various professionals will interact. This new insurance product will be

must meet all the requirements of the Registration of Titles Act, which can be cumbersome and very time consuming, as full documentation of the property ownership may be unavailable. It is estimated that there are more than 730,000 parcels of land in Jamaica, and according to government data, only some 440,000, or just over 60 per cent are registered, leaving approximately 300,000 parcels of land island-wide without titles. “The private sector can help to break the current logjam in the development process,” Mr. Cole said. “Title Insurance provides an opportunity for those persons with unregistered land to directly access financial markets. And, this insurance is now being offered by NEM directly to financial institutions, developers and individual persons.” “When you create a market situation where financial institutions can use unregistered land, you not only have Government funds supporting the formalisation of untitled land and providing loans secured against these assets, as is now the case; but it also means that private funds can go into that initiative, as well. This prospect makes it possible for landowners with unregistered properties to come into the formal market, without having to wait for a registered title,” Mr. Knight said.

Mr Earl Jarrett (right) has the attention of Ronald Graham (left) and Garfield Knight, Chairman and Chief Executive Officer Caribbean Title Limited.

title document, and it is readily accepted for financial transactions. Common law title however, is associated with the old conveyance process; and is similar to the American property ownership system. Because the deed system has no Government guarantees, financial institutions will not issue a loan backed by this type of security. “Common law titles in Jamaica can be transferred; however, a mortgage cannot be secured by a common law title only. Title Insurance will guarantee the ownership of the land so that a lender can issue funds using it as a proper security,” Mr. Knight continued.

“For registered titles, the client can decide whether to use Title Insurance or the transaction route,” Mr. Cole stated. The insurance policy being offered by NEM will be accepted by JNBS for coverage of its mortgage loans.

To get a registered title, applicants

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What is Title Insurance? Title Insurance is issued by an insurance company and guarantees that the title to a parcel of real property is clear of any defects. It provides insurance against loss from flaws in the property title. Should any inaccuracy be detected on the title, the insurance company will be bound to cover the loss incurred by the new title holder or insured lender or must take steps to correct the problem. Although a Title Insurance Policy is a type of guarantee, it only provides for resolution (by reimbursement or otherwise) if the title is not as stated in the policy. The amount recoverable can never exceed the policy amount. In this regard, Title Insurance is no different from other types of insurance. It will defend against a lawsuit attacking the title as it is insured, or reimburse the insured party for the actual monetary loss incurred, up to the dollar amount of coverage provided by the policy. There are two types of title insuranceOwner’s Title Insurance and Lender’s Title Insurance, also called a Loan Policy. Title Insurance was created in the United States and is now available in many other countries, such as Canada, Australia, United Kingdom, Northern Ireland, Mexico, New Zealand, China and Korea, as well as throughout Europe. The Borrowers Owner’s Title Insurance, to the value of the real estate covered, is purchased for a one-time fee on closure of the sale, and lasts as long as you or your heirs have an interest in the property. Owner’s Title Insurance fully protects the buyer should a problem arise with the title that was not uncovered during the title search, and pays for any legal fees involved in defending a claim to your title. In Jamaica, there are two systems of ownership. There is the title registration system and the common law title system. Unlike the registered title, the common JaRealEstateGuide.com | Page 16

law title system offers no government guarantees, therefore financial institutions will not issue a mortgage or accept it. Title Insurance will guarantee a common law title, thereby facilitating the issuing of loan funds. There are about 730,000 parcels of land in Jamaica and, according to government data, only 440,000, or just over 60 per cent, are registered, leaving nearly 300,000 parcels of land island-wide without titles. Title Insurance covers both properties with titles and those without, so a whole new class of borrowers can now benefit. At the same time, borrowers can take advantage of the accelerated mortgage loan transaction process. Lenders A Loan Policy is usually based on the dollar amount of the loan and protects the lender’s interests in the property against any deficiencies on the title. The policy coverage decreases each year and declines as the loan is paid off. Title Insurance can be used to reduce the timeframe for conveyance transactions as it allows for a more streamlined process that is consistent across practitioners and properties. This would facilitate the introduction of standard practices from as early as the sales agreement stage. The integrated system also helps lenders protect themselves against fraud and inflated values by ensuring complete quality control throughout the loan process. With the introduction of improved provisions, lenders should be able to expand their client base and to penetrate a new segment of the market, particularly with regard to common law titles. Cont’d on page 18

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Cont. from page 16...What is Title Insurance? Real Estate Professionals The current system for securing a mortgage loan on a registered title in Jamaica is slow and inefficient. There is no central storage of data relating to title defects, no deadlines for completing assigned tasks, and each professional engaged in the process charges a fee based on property value. A transaction management system makes it faster and easier for customers to submit new applications and track up-to-the-minute status on their files. It can deliver uninterrupted customer service anytime and anywhere. Residential Real Estate Agents busy with listings, client meetings and site visits, can substantially enhance efficiency at the back-end of their business by subscribing to the computerized and streamlined transaction management system. They can expect to improve their productivity, reduce costs, save time and expand their service offerings. Attorneys One of the advantages of Title Insurance is that policyholders automatically get legal protection through Attorneys contracted by the insurance company to defend their interest. Contentious real estate matters are often concluded prematurely because the property owner cannot afford an Attorney. Title Insurance will cover the cost to defend the owner’s interest in the property. Attorneys will have an additional and more formal role to play in resolving title issues. The Government Emerging research suggests that property rights play a significant role in the economic and social development of nations. A 2006 study on property rights in Jamaica stated “If property rights are not welldefined and enforced, the incentive to take by threat or violence increases, JaRealEstateGuide.com | Page 18

with the predictable results that resource owners will invest less in developing their property or even keeping it up.” No country can ensure stability within its boundaries, or contribute to economic development within the wider world, unless it has a land rights policy that promotes internal confidence among its people, its commercial enterprises, and its government, the study continued. Recognizing that land is a source of wealth lies at the heart of good government and effective public administration.

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NEM Sees Growth Opportunity in Title Insurance,” Chris Hind NEM Insurance Company Limited sees a big potential market for the two new Title Insurance products it is pioneering in Jamaica, says Acting General Manager, Chris Hind. registered titles as security for loans because of that guarantee.

Due to its massive and poorly-planned urbanization over the past half century, Jamaica has developed a culture in which the absence of property rights is a self-perpetuating cycle for most stakeholders. Successive Governments have sought to deal with the problem, but the programmes have been expensive and have had limited impact. The Legal Department of the Ministry of Water & Housing has more than 8,000 titles stored in its vault in relation to units in various schemes built by the Government since the 1970s, according to a 2007 Jamaica Information Service (JIS) release. Delivery of the titles depend on settlement of often small mortgage accounts with many of the schemes being over 20 years old. According to the JIS, some $272 million have been set aside in the 2008/09 Estimates of Expenditure to continue land administration and management programmes, in order to promote sustainable development of the planned and unplanned natural environment. The JIS states in an April 1, 2008 release that the Jamaica Land Titling Project will benefit from $11.06 million to continue to assist with the development of the Land Information and Cadastral Mapping System, which supports land registration and divestment, land valuation, and general information access for informed decision-making.

The more informal common law deeds come with no such guarantee.

Chris Hind (left) discusses Title Insurance with Neville Henry, General Manager of Nationwide Insurance Brokers. Mr. Henry was among representatives from 34 broker houses at the launch of Title Insurance.

NEM officially presented Title Insurance to some 140 attorneys, realtors and developers at the Jamaica Pegasus Hotel on April 16. A Title Insurance policy provides protection against loss caused by defects in a property title. This simple concept has major implications for the real estate market. “There are perhaps 300,000 parcels of land without registered title,” Mr. Hind said. Previously, common law titles for such properties could not be accepted in the island’s financial system. Jamaica has two systems of property ownership. There is the title registration system and common law ownership. The government offers a guarantee for a registered title, as it is part of a statestructured system of property identification. Commercial lenders can use

“Before the introduction of Title Insurance in Jamaica, common law property was an asset you could not bring to bear as collateral,” Mr. Hind said. “We now have an option to help such property holders.”

The support comes from Lenders Insurance, he said. This instrument offers lending institutions the necessary guarantees for them to issue loans against property deeds. NEM Insurance is collaborating with a local partner, Caribbean Title Limited, which will carry out the necessary diagnostic checks to verify titles. It is this verification, which will provide the data on which a policy approval can be granted. NEM is a subsidiary of Jamaica National, and the Society will be the first lender to accept the insurance policies. “Caribbean Title carries out a series of thorough checks on the title, before presenting a report to the reinsurers,” said Paul Cole, Jamaica National Financial Consultant and Project Manager for the introduction of Title Insurance. Cont’d on page 20 JaRealEstateGuide.com | Page 19

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“Caribbean Title ensures that all statutory requirements are met in preparation for the issuing of the policy,” Mr. Cole explained. It also makes certain that the various professionals involved in the transaction are properly coordinated. “We use a risk analysis method,” said Garfield Knight, Chief Executive Officer of Caribbean Title Limited. “The approach to risk assessment is more streamlined in a formal underwriting process.” In its procedures for title registration, the government aims to eliminate risk, Mr. Knight stated. By contrast, in an insurance environment, the aim is to quantify and manage the risk.

property to commercial financing, title insurance also shortens the mortgage process and should lower transaction costs, Mr. Hind said. Rather than physically moving documents between the various professionals involved in real estate transactions, a document automation system will allow for a smooth and efficient process. “Every modern business in Jamaica has to adopt new technology to enjoy those benefits,” Mr. Knight said. It is also a requirement in order to collaborate with the overseas reinsurer which will give final approval to the policies. Reinsurance for NEM is being provided through First American Title Insurance Company, a major international provider and the second largest title insurance company in the United States. “First American has never implemented Title Insurance in a partnership arrangement anywhere else,” Mr. Knight said. “Normally the company operates as a totally self-contained conglomerate coming into a country.” First American has the technical capacity to enter the Jamaican market on its own, “but based on the interactions in our market it would not be practical,” Mr. Knight said.

Once risks are known and understood, a commercial proposition may be presented for insurance. This puts the insurer in a position to provide protection for both the lending agency, as well as the property owner. For property owners, NEM Insurance provides Owner’s Insurance, which Mr. Hind said offers clients “peace of mind,” against title defects. Property purchasers can go to the insurance company if there is a problem with the title. They will be covered both against any loss caused by flaws in the title and against expenses incurred in defending any lawsuit which attacks the title. Apart from opening a new class of

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Instead, NEM will be fully reinsured by First American, Mr. Hind stated, noting that, “None of our capital is being put at risk as we are fully backed by this international Title Insurance specialist.” It is not an unusual arrangement in the insurance industry for a local insurer to partner with a major foreign insurer, Mr. Hind explained. He observed that in such instances, the foreign company gained access to a new market while the local firm had the benefit of enhancing its income and expertise from a new line of business. “This is a neat way of coming into the market,” Mr. Hind said. “We see a market opportunity for ourselves and also considerable benefits for stakeholders and the country.” JaRealEstateGuide.com | Page 21

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Title Insurance…

a Collaborative Venture

The Jamaica National Building Society (JNBS) was established through a series of mergers pioneered by the Westmoreland Building Society, which started some 134 years ago. JNBS is the largest building society in the Caribbean and the third leading financial institution in Jamaica. The Society maintains a long and rich tradition as a firstchoice institution, serving its members and customers at home, as well as in the United Kingdom, Canada, the Cayman Islands and the United States. Over the years, the Society has extended its reach, acquiring 12 subsidiaries and establishing the umbrella organisation, the JN Group, which collectively provides unparalleled service in the areas of financial services, general insurance, information technology solutions, as well as automobile and creative services. Caribbean Title Limited is the first company of its kind established in Jamaica. Its founders combined have over 40 years experience in various aspects of real estate and a vision to move Jamaica’s real estate practices to international standards. Its mission is to revolutionize title transactions resulting in an efficient and speedy process. It provides accurate property information as well as support services and systems for both registered and common law titles. NEM Insurance Co. (Ja.) Ltd. has the largest capital base among general insurance companies in Jamaica. NEM was started in 1934, when a small Kingston-based firm, A. C. Saward & Co. Ltd., was appointed Chief Agent for Jamaica by the then United Kingdom insurer, National Employers’ Mutual General Insurance Association (NEMGIA). In April 2000, NEM became a member of the JN Group and has since continued to be a leader in the insurance industry. Earl Jarrett, JNBS General Manager is a Chartered Accountant and a graduate of the University of the West Indies. Mr. Jarrett joined the Jamaica National Building Society (JNBS) in May 1997. He was appointed General Manager in October 1999. Under his dynamic leadership, JNBS has recorded significant growth in both the local and overseas markets. JaRealEstateGuide.com | Page 22

Mr. Jarrett serves on the Executive Committee of the International Union for Housing Finance (IUHF), which tracks best practices and innovations in some 50 countries, and is Board Advisor for the Inter-American Dialogue Financial Services. He also sits on the Executive Board of the Caribbean Association of Housing Finance Institutions (CASHFI), which has responsibility for all related institutions across the Caribbean; and served as a Vice President of the Private Sector Organisation of Jamaica. He is a member of the National Council of Jamaica Order of St John, a member of the University of the West Indies Mona Campus Council; and in October 2007, he was named Deputy Chairman of the Jamaica Tourist Board (JTB). Garfield Knight, Chief Executive Officer of Caribbean Title Limited is an Engineer by profession. He holds a Masters Degree in Management Information Systems and has more than 15 years experience in corporate management, specializing in project and change management using technology. Mr. Knight brings to Caribbean Title his extensive experience in land management and real estate operations, having served as a Director of the National Land Agency (NLA) and as a Board Member of the National Housing Development Corporation (NHDC). He has also provided consultancy and presented papers for various land reform projects funded by multilateral institutions in the African and Caribbean regions. Chris Hind, Acting General Manager of NEM Insurance is a graduate of the University of Bristol where he gained a Bachelor of Arts degree, with joint honours in Modern Languages. He also has an MBA from the Cranfield School of Business. He was seconded to NEM Insurance Company Limited as Chief Risk Officer and was promoted to the position of Acting General Manager in 2007. His previous positions include Head of Operational Risk for the JN Group and a similar position with the National Commercial Bank (NCB). Prior to entering the private sector, Mr. Hind was in charge of special investigations at the Revenue Protection Division of the Ministry of Finance and Planning.

M o r t g a g e G l o s s a r y

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Amortization – Method of repayment in which the amount you borrow is paid for over a period of time through monthly payments of principal and interest. During the first few years of the loan most of the amount paid is applied towards the interest. In the last few years of the loan, most of the amount paid is applied towards the principal. Appraisal Fee – a few charged by an appraiser whose business is to render an opinion on the value of a specific property. This is usually required by most lenders in order for the buyer to obtain a loan. Closing Costs – Fees or costs paid in addition to the down payment on closing day of the mortgage loan. This can include attorney fees, loan origination fees, appraisal fees, escrow fees, title insurance, taxes and other items which must be prepaid. Contract of Sale – The agreement between the buyer and seller on purchase price, terms and conditions to be met to convey the title to the buyer. Down payment – The difference between the purchase price and that portion of the purchase price for which a mortgage is being obtained. The down payment can be paid from the buyers own funds or from gifts from relatives. Minimum down payment required is usually in the region of 20% of the purchase price however some lenders have special plans that requires no money down or 5% down.

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Equity – The difference between a home’s fair market value (appraised value) and the outstanding mortgage balance. Gross Income – The income of the borrower before taxes and other statutory payments are deducted for qualifying purposes. Home Equity Loan – A fixed or adjustable rate loan secured by the equity in the home. This type of loan can be obtained for a variety of purposes including home improvement, other real estate or investment, car loan, education loan, credit or medical debt or emergency. Mortgage loan – A loan which utilizes real estate as security or collateral to provide for repayment should the buyer default on the terms of the loan. Prepayment Penalties – Fees charged by the lender to a borrower who pays off his loan balance before it is due. Qualifying ratios – comparisons of the borrower’s gross Monthly income vs debts and expenses. Usually the Monthly payment cannot be more than a specified amount by the lender, of the borrower’s gross Monthly income. Also all the borrower’s Monthly debt usually cannot be more than a specified amount by the lender, of his Monthly income. Some leniency may be applied based upon down payment, credit history, etc.

Source: JaRealEstateGuide.com

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