Current guidelines on DTI for conventinal loans?

[BallBounces]

Anyone in the business want to comment on what are the current front and back DTI ratios that lenders are looking at for conventional loans and typical (average credit) applicants.

Is 30/40 a reasonable (or stiff) guideline?

[sunrise]

I am NOT in the business...but, just went through financing for a mortgage and did MUCH shopping around!!  This is what I found:

Pretty much everyone SAID 28/36....but, they also mentioned that each one had their own "in-house preference"...it seemed to be 36/40 in my area...most said the front-end doesn't matter to them...they wanted to keep the back-end at, or under 40.

We were approved at 3 local banks and our numbers were 36/44, so, go figure??!!  We were told because we have a 71% LTV and decent reserves they were able to let us go higher in the ratios.

So, you can see there are a lot of variables that really make up what a lender wants to see as far as ratios go.  I think if you can get through AU or LP...most banks will try to work with you.  AU & LP have been know to approve loans with up to 70+ back-ends, from what one lender told me!?!?! That is craziness, which is probably what led to the mtg. crisis?!

I would check with a local lender, it seems everything is changing on a daily basis!

LP is Loan Prospector used through Freddie Mac...AU is Automated Underwriting used through Fannie Mae...this is what lenders have told me......if I am wrong, others will let you know!

[Anonymous]

May I ask....What do you mean by Front End and Back End?  I have seen it in my own research, but don't understand what it refers to.....Is it just the ratios of debt they will work with?

[BallBounces]

Front end is the DTI ratio that includes your mortgage and related monthly expenses.

Back End would add all your loan obligations like auto, personal, and student loans.

Typically, loans set to be paid off in 10 months  are not included inthe back end calculation.

Message Edited by VistaV on 03-19-2008 08:47 AM