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DTI/ Student loans!!!!! fha

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PFSmit0408
Established Member

DTI/ Student loans!!!!! fha

I have a tentative closing date of 08/31- so now my LO is calling every minute for something he needs- which is not a problem. This is the problem I've been with my current employer 3 yrs as of oct. Since I started with my employer my income has changed due to it being an hourly plus bonus sales job plus promotions :

 

07- $24,000 as gross

08- $36,000 as gross

09-yr to date- $30,000  expect to make between - $45,000-$48,000

 

My loan officer pre-approved me for $170,000 with student loans in deferment- without looking at any of my information!!! The home that I am in contract for is $155,000. The problem that has arised is my student loans are in derferment until 01/10 he needs it to be until at least 09/10- I called sallie mae and it is nothing that they can do.. This has become an issue since he pre-approved me for a gross income of $43,000 and I did not make that last yr so he has to take the average of yr to date and last yr- and therefore it is causing me to have high DTI's. What do I do? I was given a GFE of about $5800 for closing which I have saved...

 

car loan- $385- 13mos remaining

student loan- $260

no cc debt

 

fico scores per Myfico trans- 663

Message 1 of 8
7 REPLIES 7
DallasLoanGuy
Super Contributor

Re: DTI/ Student loans!!!!! fha

only thing you can do is see if the u/w will take a higher income. sometimes it is a judgment call.

sometimes it is pretty black & white.

if the bonus stays the same but the base goes up, you have an argument

 

 

lo did a poor job of preapproval if they didnt review deferment status.

 

Retired Lender
Message 2 of 8
Anonymous
Not applicable

Re: DTI/ Student loans!!!!! fha

I make $50k, car pmt $453 (30 months remaining), student loans $306.  I was approved for $150k FHA.

 

When I started my app, I was expecting a raise (nobody got any this year), and my LO told me that they would just need one new pay stub in order to qualify me at the higher salary. ie, if I was raised to $60k, they would just need one stub and then my salary for DTI purposes would be the full $60k.  In your situation are you a 1099?  Otherwise, they should approve you at your current annual salary.  The 2 years of W2s is just to show constant employment.

 

Also, my LO told me that any debt with under one year of payments remaining does not count in DTI.  You are one month away of your car payment not figuring into your DTI.  Did your LO explain this?

Message 3 of 8
DallasLoanGuy
Super Contributor

Re: DTI/ Student loans!!!!! fha


@Anonymous wrote:

 

Also, my LO told me that any debt with under one year of payments remaining does not count in DTI.  You are one month away of your car payment not figuring into your DTI.  Did your LO explain this?


 

CAN be excluded if not significant. over $100 is significant. Also must be deemed to not hinder ability to makemortgage payments.

most of the large banks follow these rules.

 

 don't count on the lenderexcluding a payment. ask

 

Retired Lender
Message 4 of 8
DallasLoanGuy
Super Contributor

Re: DTI/ Student loans!!!!! fha

* Installment debt (Note: Installment debts with fewer than ten
payments remaining may be excluded from the ratio calculations.
However, if the AUS indicates that manual underwriting is required,
then the DE underwriter must determine that short-term debt will not
negatively affect the borrower's ability to make mortgage payments

during the early months following loan settlement.

 

 

 

 

this is from the HUD Manual 4155 REV-5 (the bible)

 

 

note: it says MAY be excluded. lender guideline overlays have determined that debts over $100 still must be included. but i have seen a couple of instances where that payment was washed out with liquid assets. we just simulate paying off the debt entirely with liquid assets and run thru sutomated for approval.

 

YOUR loan officer needs to think outside the box and get this done if they can. we cant answer this for you as underwriter's opinions vary.

 

Retired Lender
Message 5 of 8
Anonymous
Not applicable

Re: DTI/ Student loans!!!!! fha

A Verification of Employment should be able to clear up the income issue altogether. The car loan can't be excluded from the debt, but can you pay it off or refinance it to a much lower payment if needed?
Message 6 of 8
Anonymous
Not applicable

Re: DTI/ Student loans!!!!! fha

Ah.  So, Dallas, with a $400-$500 per month car payment, you would pretty much need to be completely done or have 1 or 2 months left depending on your LO?  I didn't realize that.
Message 7 of 8
DallasLoanGuy
Super Contributor

Re: DTI/ Student loans!!!!! fha


@Anonymous wrote:
Ah.  So, Dallas, with a $400-$500 per month car payment, you would pretty much need to be completely done or have 1 or 2 months left depending on your LO?  I didn't realize that.

if you had 5 payments left and lots of cash reserves, the u/w might consider exclusion by reducing you assets by 5X the pmt amount and u/w the loan that way.

ask the lo to see if they can do that

 

Retired Lender
Message 8 of 8
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