Hello Everyone...I have a couple questions regarding DTI and joint applicant employment.
We plan to build a new home between $218k- $225k. 5% down. Tax rate is 3.34%, but with homestead exemptions it is effectively 2.8%.
I'm hoping to start the mortgage process in January 2015. I really want to avoid applying with my wife (due to the efforts needed to clean up her credit while saving for down payment AND paying down my own debt), but my DTI is just too close for comfort. Is 42% DTI a big problem on conventional loans? All the online resources recommend 36%. I think I'm going to have to bite the bullet and clean up her credit because I don't want any surprises. I plan to apply with Navy Federal CU and another CU to try to avoid PMI.
My concern is my wife's employment. She recently started a job @ $35k. And by the time we apply for the mortgage, she will be employed less than a year. She was a stay at home mom before that with little/no income. Will most lenders overlook her employment being less than 2 years given my stable history and a favorable DTI of 36%? I have been in the same job since 2010. If her employment history will be a problem, I will just go a little cheaper on the home to get my DTI under 40% and save the hassle of dealing with her credit.
My situation (without my wife's info):
My Middle Score: 650 (but should be over 700 after I pay down my debts and age my new accounts for the next 8 months. currently 60% utilization ratio. also, 7 inq. will fall off)
Perfectly clean payment history except. Only 1 settled collection.
Gross Income: $71k
Monthly debts: $745 (CS, student loans, no car payment since only 8 payments will be left at the time)
DTI = ~41-42% (too close for comfort) 
Our situation together:
Lower of our 2 middle scores: 690-710 (after I fix my wife's credit)
Gross Income: $110,000
Monthly Debts: $1700 (this number is inflated due to my wife's student loans being in deferment so I put $500 since the lender will use standard payment. The actual payment under IBR will be a lot less.
DTI = 36-37% (a lot better)
Any advice would be greatly appreciated!!
