Overhaulin'

DTI 35% calc before or after mortgage?

Ok, so my hubby's DTI ratio is 35%. This is without a mortgage payment (darn car payment and student loans) (we are trying to get a house). Does our new mortgage payment need to be calculated with this number? Will a lender look at that and say the ratio is too high to qualify for a mortgage? can you please explain to me how they look at this? We're trying to get FHA in Pennsylvania.

Public Comments

1. Up until about 8 years ago, lenders required that your total debt to income could not exceed 36% of your gross monthly income and that includes your mortgage. Sub prime lending came along and increased the dti to 50%. FhA is making alot of drastic changes at this point in order to give people a chance to refinance or purchase new homes. Your best bet is to arrange a meeting with an FHA approved lender to get the latest news of the changes. You can find these lenders in your yellow pages. Words of wisdom: Do not go more than 40% of your gross income into debt.
2. They will look at all payments due, and the proposed mortgage payment. This is called your "back ratio" It may not be too high depending on the purchase price of the house. We have done FHA loans with back ratios as high as 56. Also depending on where in PA you live, check out USDA loans. 102% financing, no mi. Also, if you have income, that can be included also, to lower the total ratio. Mike