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Laura Borja- Home Loan expert- NMLS 199107

A debt to income ratio (DTI) is the percentage of your qualifying income  that is allocated to debt.

What is included in the DTI?

  • The estimated total housing payment for the new mortgage loan
  • All debts reflected on the credit report
  • Estimated payments for any deferred student loans with zero payment on the credit report
  • Alimony and child support
  • Payments on State and Federal income tax  payment agreements
  • Any other debts that you are obligated to pay
  • In community property states, the debts of the non-purchasing spouse will be included in the DTI calculation.

 

Installment debt with less than 10 months remaining could be excluded from the DTI calculation.

 

Paying off installment and revolving debt to qualify IS allowed.

What is the max  DTI?

That is a tougher question to answer as the amount varies widely. The percentage can be anywhere between 40%  to 50% based on the loan program, the occupancy, the  loan to value and the credit score..

 

Also, though each program might set a max DTI, that doesn't mean that you will be approved with that maximum ratio.

 

For example, let's say the program has a max 50% total DTI, however, you are doing the minimum amount down, have a credit score that just makes the cut ,have just enough money to cover the cash to close and your new mortgage payment is double what you were paying in rent before.  It is entirely possible that the automated underwriting system will determine that your risk level is too high to allow you to go to the max DTI.  In that case, your loan would need to be restructured with more down payment or less debt to lower the DTI and allow for an approval.

 

Your loan officer will be able to guide you on what needs to be done to meet the qualifying guidelines.

This overview is not all inclusive and does not include all guidelines or potential qualifying situations. Contact us or your lender for additional information that applies to your situation.

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Laura Borja  | Senior Loan Officer | NMLS#199107

Cell: (619) 992-4061 | Branch Main: (858) 264-1547

laura.borja@supremelending.com

1615 Murray Canyon Rd ste 1020 San Diego CA 92108

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Laura Borja- Home Loan expert- NMLS 199107
Laura Borja- Home Loan expert- NMLS 199107
Laura Borja- Home Loan expert- NMLS 199107