Mortgage Loans

[Llhg71]

What bills are used to determine the DTI?  I have a car payment and one credit card That shows up on my credit report.  Then I have the usual rent, utilities and such.

[Mike_B03]

Basically anything that you're obligated to pay, so things like utilities don't count because you could technically cancel them at any time. They just go by whatever minimum payments appear on your credit report, but you're supposed to also disclose any other obligations you have tha don't appear (like payment arragements for a judgment or tax lien). They won't count your current rent, but they will count whatever the new mortgage payment (including principle, interest, taxes, insurance) will be.

[MovingForward_2012]

+1, it is also known as the back end ratio and usually lenders want it to be 41-43% max, but it depends on the loan product.

[leppy2]

What is front end ratio?

[Mike_B03]

Front end ratio is the PITI (principle, interest, taxes, insurance). The guideline is usually 31% of your monthly income, while back end (PITI + all other monthly debts) is usually 43%.

[JM-AM]

While what Mike said is true it also depends on the loan program.

Different requirements for different types of loans.

[MovingForward_2012]

Right. And the front and back end ratios are computed using your gross monthly income before taxes. Each lender has their own guidelines on what the max ratio should be.