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Regular Contributor
MaryJane197
Posts: 138
Registered: ‎01-05-2009

DTI Questions

[ Edited ]

I am very confused.  Im hoping someone can help me.  My LO from Wells Fargo said that I need my ratios to be 29/41   So 29% of my income can be a house payment of 41% can be all debts?  I that right?   I need someone to help me figure out how much more income i would need to make to even out my DTI ratio.   I make 1408.00 a month.  When it comes to percents i am totally lost. 

 

 

The only debt i will be paying on is my car payment which is 365 a month.

Message Edited by MaryJane197 on 01-08-2009 07:38 PM
01/10/09: - TransUnion: 500 / Equifax: 521, / Experian: 566
Filed BK 02/24/2012
07/28/2012: - Transunion:487 / Equifax:467 ,/ Experian: 586

06/06/2014: - Transunion:509 / Equifax:513 ,/ Experian: 551

07/25/2014: - Transunion:516 / Equifax:541 ,/ Experian: 574
Senior Contributor
Wonderin
Posts: 3,494
Registered: ‎05-25-2008

Re: DTI Questions

[ Edited ]

MaryJane197 wrote:
I am very confused.  Im hoping someone can help me.  My LO from Wells Fargo said that I need my ratios to be 29/41   So 29% of my income can be a house payment of 41% can be all debts?  I that right?   I need someone to help me figure out how much more income i would need to make to even out my DTI ratio.   I make 1408.00 a month.  When it comes to percents i am totally lost. 


ALL of your debts cannot exceed 41% for an FHA loan (even though I've heard here that if otherwise your file is great, you can exceed it by a bit). That means ALL of your installment and revolving credit bills AND your proposed mortgage payment totaled together can NOT exceed 41%.

To find out what the "max" would be, simply times $1408 x .41 -- that will give you your "max" allowed (in this case, $577). To figure out what mortgage you'd qualify for, you'd add your debts, minus them from $577, and then you'd have the mortgage payment you'd be qualified to make.

So we'll take your $365 car payment. So, $577-$365=$212. $212 would be the "max" mortgage payment you'd qualify for under FHA, using that rule.

For conventional, I believe, the ratios are higher.

(I'm using $100 increments 'cause my math sucks)

For the 29%, that refers to how much your mortgage payment can be versus your income. So if you make $1400 (rounding it up, 'cause, remember, I HATE math and math hates me), then your mortgage can't exceed $408 .

Did that make sense? My math sucks, so so does my explanations involving math. :/
Message Edited by Wonderin on 01-08-2009 09:49 PM

~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*

Hubby's FICOs when we started: high 400s (June 2008)
Hubby's FICO NOW (04/06/09): TU: 679 EQ: 608 EX: ???
My FICOs: TU: 643, EQ: 606
Closed on new home: 1/20/2009 -- If we can do it, YOU can do it!!

Senior Contributor
Wonderin
Posts: 3,494
Registered: ‎05-25-2008

Re: DTI Questions

Also, I noticed in another thread you said that your LO wants you to pay down your car note before apping, right?

Once you have less than 10 payments remaining on an installment loan, FHA doesn't require it to be calculated into your DTI (which you probably already knew). Once that happens (meaning, once you no longer have to count the car note/$365 a month in your DTI), you could afford, per FHA guidelines, a $408 mortgage payment, or possibly $577.

Dallas, Shane or Brian would be the best at answering that particular issue (obviously! They're the Mortgage Gurus!). Hopefully, one of them will be in shortly!

~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*

Hubby's FICOs when we started: high 400s (June 2008)
Hubby's FICO NOW (04/06/09): TU: 679 EQ: 608 EX: ???
My FICOs: TU: 643, EQ: 606
Closed on new home: 1/20/2009 -- If we can do it, YOU can do it!!

Regular Contributor
MaryJane197
Posts: 138
Registered: ‎01-05-2009

Re: DTI Questions

[ Edited ]

That did make alot of sense actually.  I see what she was saying when my DTI ratio was to high.  I was trying to figure in with my child support payments if i would be able to raise my income level.  But it doesnt seem to me that i can.  

 

 

This is what i have figured.  I make $1408.00 , the only debt i will be paying is for my car which is $365.00 a month.   My child support payments are $200.00 extra a month.  So that makes my income $1608.00 so i times this by .41 which makes it $659.28  , subtract my debt of $365.00 and that makes it $294.28   I dont see how i would be able to get a mortgage with a payment of $294.28 .   Did i do that right?  I totally flunked math in school.  I hate numbers.

 

 

Yes your right thats what she suggested.  She said i need to either get my child support counted as income or pay my car down to 3k.  Which the second isnt going to happen this year.  Ive only had the car 10months and i still owe 10k on it, lol   So if i did that approach i would have to wait until next year to pay it down.

Message Edited by MaryJane197 on 01-08-2009 07:58 PM
01/10/09: - TransUnion: 500 / Equifax: 521, / Experian: 566
Filed BK 02/24/2012
07/28/2012: - Transunion:487 / Equifax:467 ,/ Experian: 586

06/06/2014: - Transunion:509 / Equifax:513 ,/ Experian: 551

07/25/2014: - Transunion:516 / Equifax:541 ,/ Experian: 574
Senior Contributor
Wonderin
Posts: 3,494
Registered: ‎05-25-2008

Re: DTI Questions

Did some quick numbers crunching at Bankrate's "How Much Home" calculator and it says that (and this depends on SEVERAL factors: the rate you get, the taxes and insurance, and the down payment) you'd probably qualify for an $80K mortgage.

How much down payment do you have? What are taxes and insurance like in your area?

~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*

Hubby's FICOs when we started: high 400s (June 2008)
Hubby's FICO NOW (04/06/09): TU: 679 EQ: 608 EX: ???
My FICOs: TU: 643, EQ: 606
Closed on new home: 1/20/2009 -- If we can do it, YOU can do it!!

Regular Contributor
MaryJane197
Posts: 138
Registered: ‎01-05-2009

Re: DTI Questions

Taxes run from 200 to 300 here.  Not really sure.  I need to check on taxes and insurance rates here.  I have 2k for a down payment.  But she is trying to get me a Fha loan and she said i probaly wouldnt need a down payment.
01/10/09: - TransUnion: 500 / Equifax: 521, / Experian: 566
Filed BK 02/24/2012
07/28/2012: - Transunion:487 / Equifax:467 ,/ Experian: 586

06/06/2014: - Transunion:509 / Equifax:513 ,/ Experian: 551

07/25/2014: - Transunion:516 / Equifax:541 ,/ Experian: 574
Senior Contributor
Wonderin
Posts: 3,494
Registered: ‎05-25-2008

Re: DTI Questions


MaryJane197 wrote:

That did make alot of sense actually.  I see what she was saying when my DTI ratio was to high.  I was trying to figure in with my child support payments if i would be able to raise my income level.  But it doesnt seem to me that i can.  

 

 

This is what i have figured.  I make $1408.00 , the only debt i will be paying is for my car which is $365.00 a month.   My child support payments are $200.00 extra a month.  So that makes my income $1608.00 so i times this by .41 which makes it $659.28  , subtract my debt of $365.00 and that makes it $294.28   I dont see how i would be able to get a mortgage with a payment of $294.28 .   Did i do that right?  I totally flunked math in school.  I hate numbers.

 

Yes, those numbers ARE right BUT it's a matter of guidelines, from what *I* understand. If you have an otherwise strong file (reserves, large down payment, awesome credit, etc), then (again, as *I* understand it), the guidelines can be negotiable.

 

Oh, and I hate numbers, too!!! :smileyhappy:

 

 

Yes your right thats what she suggested.  She said i need to either get my child support counted as income or pay my car down to 3k.  Which the second isnt going to happen this year.  Ive only had the car 10months and i still owe 10k on it, lol   So if i did that approach i would have to wait until next year to pay it down.

Message Edited by MaryJane197 on 01-08-2009 07:58 PM

I HATE to ask this, but do you think you could try to sell the car and use the difference between the selling price and the loan to buy a beater car?

 

I ask 'cause IF you didn't have this car note, AND you DID have the CS, you could *probably* get away with a  $659 mortgage payment -- at least, a payment MUCH higher than $294.

~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*

Hubby's FICOs when we started: high 400s (June 2008)
Hubby's FICO NOW (04/06/09): TU: 679 EQ: 608 EX: ???
My FICOs: TU: 643, EQ: 606
Closed on new home: 1/20/2009 -- If we can do it, YOU can do it!!

Senior Contributor
Wonderin
Posts: 3,494
Registered: ‎05-25-2008

Re: DTI Questions


MaryJane197 wrote:
Taxes run from 200 to 300 here.  Not really sure.  I need to check on taxes and insurance rates here.  I have 2k for a down payment.  But she is trying to get me a Fha loan and she said i probaly wouldnt need a down payment.


If that's the case, IF you got rid of your car loan AND got the CS, you'd be qualified for (as per Bankrate's calculator) an $85K mortgage.

~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*

Hubby's FICOs when we started: high 400s (June 2008)
Hubby's FICO NOW (04/06/09): TU: 679 EQ: 608 EX: ???
My FICOs: TU: 643, EQ: 606
Closed on new home: 1/20/2009 -- If we can do it, YOU can do it!!

Regular Contributor
MaryJane197
Posts: 138
Registered: ‎01-05-2009

Re: DTI Questions

[ Edited ]

I dont think i will be able to sell it for what i owe.  I did blue book value on it today and its only worth $5k.  And i still owe 10k on it.  That was a shocker to me.  But i bought it used.  I really needed when i got it.  My previous car i owned and the motor blew up in it.  This one has a warranty on it that ive used alot! lol

 

 

 

What i dont understand is that in her office calculating the extra income in she used 193.00 a month extra and said if i could count that as income then i was good.  But when i calculate it the amount i have left wouldnt be a house payment.  Oh and i dont have excellent credit.  When she pulled my mid score it was just 542.  (sighhhs)

 

Thats a really great website.  Glad you posted the link.  Looks like i will have to figure out a way to reduce my debt on the car.  Or sell it, lol  No matter if i make more money i still cant afford a payment high enough to get anything decent here.  How much of a monthly mortgage payment are they wanting it to look like on paper?  Im paying 400 a month in rent with no problems right now.

Message Edited by MaryJane197 on 01-08-2009 08:23 PM
01/10/09: - TransUnion: 500 / Equifax: 521, / Experian: 566
Filed BK 02/24/2012
07/28/2012: - Transunion:487 / Equifax:467 ,/ Experian: 586

06/06/2014: - Transunion:509 / Equifax:513 ,/ Experian: 551

07/25/2014: - Transunion:516 / Equifax:541 ,/ Experian: 574
Senior Contributor
Wonderin
Posts: 3,494
Registered: ‎05-25-2008

Re: DTI Questions


MaryJane197 wrote:

I dont think i will be able to sell it for what i owe.  I did blue book value on it today and its only worth $5k.  And i still owe 10k on it.  That was a shocker to me.  But i bought it used.  I really needed when i got it.  My previous car i owned and the motor blew up in it.  This one has a warranty on it that ive used alot! lol

 

What i dont understand is that in her office calculating the extra income in she used 193.00 a month extra and said if i could count that as income then i was good.  But when i calculate it the amount i have left wouldnt be a house payment.  Oh and i dont have excellent credit.  When she pulled my mid score it was just 542.  (sighhhs)

 

She was probably going a bit above the ratios the sites talk about. Dallas and Shane talk about using those guidelines AS guidelines (meaning, not set in stone). Dallas and Shane always refer to the "whole file" -- not just the credit or ratios portion.

 

Thats a really great website.  Glad you posted the link.  Looks like i will have to figure out a way to reduce my debt on the car.  Or sell it, lol  No matter if i make more money i still cant afford a payment high enough to get anything decent here.  How much of a monthly mortgage payment are they wanting it to look like on paper?  Im paying 400 a month in rent with no problems right now.

 

I dunno ... if you're paying $400/month and have no problems, that might be a compensation factor? Dallas, Shane or Brian would have to field that one.

 

But I'd think that if you could *prove* that you've been paying $400/month for rent and have had no problems doing so, that would mean SOMETHING. You know?

 

Did you ask the LO?

Message Edited by MaryJane197 on 01-08-2009 08:23 PM


I REALLY think you need Dallas, Shane or Brian's input on this. Hopefully, they'll be in in a bit and can offer some advice and feedback.

~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*

Hubby's FICOs when we started: high 400s (June 2008)
Hubby's FICO NOW (04/06/09): TU: 679 EQ: 608 EX: ???
My FICOs: TU: 643, EQ: 606
Closed on new home: 1/20/2009 -- If we can do it, YOU can do it!!


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