Helping Military and Civilian families realize the dream of homeownership since 1990
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
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.
Experience Integrity Results
Laura Borja | Senior Mortgage Consultant | NMLS#199107
Cell: (619) 992-4061
laura@lauraborja.com
27271 Las Ramblas ste 350 Mission Viejo CA 920691
©Laura Borja 2008-2021 All Rights Reserved | Site Design by Lulu Bee Marketing
This website is not authorized by the New York State Department of Financial Services to accept mortgage loan applications for properties located in New York. Intended for California Consumers Only.
Ocean Lending Home Loans Inc. NMLS ID #1626788 (www.nmlsconsumeraccess.org). 27271 Las Ramblas ste 350 Mission Viejo CA 92691 (888) 508-5030. All rights reserved. This is not an offer to enter into an agreement. Information, rates, & programs are subject to change without prior notice and may not be available in all states. All products are subject to credit & property approval. Ocean Lending is not affiliated with any government agency. Licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act License# 41DBO76602 and Finance Lender Law License #60DBO71981.