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Required DTI and cash reserves

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Game Guest	Posted: Thu Oct 13, 2011 12:51 am    Post subject: Required DTI and cash reserves Like 0 Dislike 0 I have found that the DTI ratio should be no more than 25/36. Is this DTI standard for conventional mortgages? Also I took a loan out on my 401k last year when I was going through a divorce and am currently paying back the loan. Will this loan payment be considered in my back-end DTI when applying for a loan? When I was speaking to the lenders about my mortgage, they mentioned that these days they will require reserves when applying for a mortgage. Is there a certain amount of reserves that you a required to have liquid while applying for the mortgage? _________________ Need help choosing the right loan? Get free consultation from community lenders/consultant
jameshogg Joined: 20 Dec 2005 Posts: 10477 Location: Nevada 990.06 Dollars($)	Posted: Thu Oct 13, 2011 1:44 am    Post subject: Like 0 Dislike 0 Hi Game, As far as I know, the debt to income (DTI) ratio for conventional loan is 28/36 whereas the DTI ratio for FHA loan is 31/43. When you apply for a conventional loan or a FHA loan, the lender will want you to have this required DTI ratio or else he won't approve you for the loan. It is true that lenders will want to have cash reserves in your bank account apart from the down payment. You should be able to show your lender that you have a cash reserve equivalent to 3-4 months of monthly mortgage payment in your bank account when you take out the loan. Thanks

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