DTI Calculation help

[mike500]

To start out with, i went in for a preapproval on wednesday and got approved. This is my first home and everything was VERY overwhelming to say the least. I left there feeling pretty good overall though.

After thinking about it, I have one MAJOR concern now. the lender told me that even though i was approved, my DTI was 51% and I would most likely have to find a way to bring that down.  After looking over all my bills, I calculated a DTI of 38%. Here are my calculations:

I calculated about 38% back end DTI with the bills i pay right now:
$   450 monthly bills (2cc's x 50, 350 Car Payment)
$1,200 preapproved mortgage payment *edit: see 3rd post for calculations*
$1,650 total monthly obligation

$4,375 gross monthly income

1650/4375 = 38% back end DTI

In order for me to have a back end DTI of 51%, my total monthly obligation would need to be $2,230 or an extra $580 a month!

I have some student loans that are in deferrment cause i am currently attending part time, but they were super small, i think it was $65 a month before they were deferred.

If i am calculating this wrong, let me know. Does the bank use NET income rather than GROSS? They never asked me what that was, nor did they ask for any current monthly payment other than the rent i pay right now (1100)

What am I missing?

[Anonymous]

Questions:

Is that mortgage payment of 1,200 including PMI (private mortgage insurance,)proposed property taxes, and homeowners insurance?

If not, you must include those in the back ratio. It looks to me as that is what your loan officer including, but you are not including. Pure speculation. Can you give us more info? Bank uses gross.

yesme.

[mike500]

sorry, yes this includes PMI and insurance and taxes:

$   773.69 P&I

$   300.00 Taxes

$     25.00 Hazard insurance

$   107.82 Mortgage insurance

$1,206.51 Total Monthly Mortgage Payment

I should have included that in the first post.

[Anonymous]

I've had this happen to me several times. LO's use the accounts and their respective monthly payments that are listed on your credit report to calculate DTI. With that said, sometimes things get added in that shouldn't or you forget something. In any case, the best way to know how they got the higher DTI is to ask them directly and go thru each account and payment that they are adding in and the income amount they've used. Its not rocket science so it'll most likely be an "ahhha!" Moment for either you or the LO. So just ask what numbers they used and for which accounts and that'll clear it up.

[mike500]

Thanks for the responses everyone.  I just contacted my LO and he will be getting the numbers together for me. I was approved at this supposedly high DTI of 51%, maybe because the mortgage payment is only $100 more a month than ive been paying in rent for the past 3 years? I dunno, i hope my calculations are correct, or even partially correct. I have had no problems whatsoever with my rent and being able to save, so im not sure im not at 51% right now.