diane, that all depends on the loan product for which you try to qualify. some of our products, for example, are quite conservative. we have a first-time homebuyer product that requires your mortgage payment ratio to be not more than 35%-36% and the overall debt ratio to be in the low 40's (41 or 42ish).
there are other products that allow a lot more leeway, depending on your credit score, how much you may have in cash reserves, and how much of a down payment you'd have.
with the best of credit and a large down payment, you might be able to get by with ratios in the 50s, on a conventional loan product. _________________ George M. Akerley
Senior Loan Officer
Freedom Mortgage Corporation
37 Jerome Avenue
Bloomfield, CT 06002
860-221-5044
The ratio is determined by the debts appearing on your credit report/s. If you want to be really safe, when figuring it yourself, include all your monthly bills including utilities -- if you're under 50%, you're good-to-go with most any lender. If not, you might need a broker to advise you on a lender that will deal with higher ratios.
good borrowers have ratios 25-35% -- marginal borrowers have ratios 35-45% -- the interest rates for each obviously varies. _________________ Need help choosing the right loan? Get free consultation from community lenders/consultant
The DTI ratios are determined by program
FHA and USDA have more conservative guidelines. Both can be a little higher if there are compensating factors in your favor ie: good credit, reserves, big down payment etc. Both like to see low 30'd for housing and a combind debt to income in the low 40's. High 40's is still likely on FHA but it has to be an aurtomated approval. Manually underwritten loans must be less than 43%
Conforming loans had a very high tolerance for a while but it has come back down into the 50's froam what I understand. There for a while it was up to 65%
Ive had cases in the past with loans being approved at 65 or higher. how? well the borrowers would have near 800 credit scores 40% loan to value (not exactly 40 but you get my drift) and enough assetts to drop jaws. Its really case by case but unless you have 2 of the 3 things i stated here then i would really pen it at 50% tops unless you have to go FHA where it would be lower. If you need further explanation on that im available during the day here. good luck to you.
dianemartin2
