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## Debt to income Ratio

Regular Contributor

## Debt to income Ratio

If I have 10 payments left on my car, will that be included into the formula.?

CC & Car note total 547 and my income is 3562/mnth =  15%

If I'm a single person making \$40,000 a year, how do they determine how much house I can afford?
Message 1 of 17
16 REPLIES
Super Contributor

## Re: Debt to income Ratio

Nope, 10 payments or less on installment (and even revolving) can be excluded from your debt to income ratio.

What you can afford and what you can qualify for could be two different things... some of my clients say they can never afford what they have been qualified for, and visa versa, some say they can afford much more.  Up to a 64.99% debt to income ratio can qualify, so to determine how much of a housing payment you can qualify up to you'd take \$3,562 x .6499 = \$2,314.94.  \$2,314.94 - your credit card payments (not your car since it has 10 months left) would = \$X,XXX.XX.   Now how do you figure out how much that translates into home sales price or mortgage amount?  Well you'd have to lay out more details for me, including where you live, what sales prices would accommodate your living situation (you can check out homes at www.realtor.com) and how much of a down payment you'd plan on putting down (if any).
Mortgages (FHA, VA, USDA, Fannie, Freddie, Non-Prime) since 2002, based in Irvine, CA and lending in all 50 states

Information that is needed to determine if you qualify for a mortgage

Message 2 of 17
Established Contributor

## Re: Debt to income Ratio

Shane,

I'm in exactly the same boat this other person is, scenario and all (including figures, salary \$43k), debt same...past 5 years, no lates - have (4) open good TL...have the tax lien being paid this coming Monday.

Live in MN but I honestly have to live in an area where it's expensive...because my kids attend school there and I don't want to drive 480 miles per month any longer...MN - I've watched foreclosures & bank owned for the past 3 years dreaming of this moment and it's almost here...I took the home buying class and know I qualify for a few first time home buyer programs...I believe also an FHA but not sure if that can be combined with MHFA program, etc.

What would be the max amount of mortgage I could look at to keep my total payment for house PITI at \$1400?  Taxes I estimate about \$2200, insurance about \$80/month...

Thanks!!!

PS - Yes, I'm going to start meeting with banks but I just want to have an idea

Message 3 of 17
Super Contributor

## Re: Debt to income Ratio

beach123, how much do you have in other monthly payments (car, credit cards, etc.)?  Would you have a down payment or are you trying for as close to 100% as possible?
Mortgages (FHA, VA, USDA, Fannie, Freddie, Non-Prime) since 2002, based in Irvine, CA and lending in all 50 states

Information that is needed to determine if you qualify for a mortgage

Message 4 of 17
Established Contributor

## Re: Debt to income Ratio

My debt long-term debt is \$563 but I possibly can bring \$100 of it down to NOT long-term debt...

I'm paying off the high interest auto loan since one bank said I only needed the 3 good tradelines...and yes, I'm trying to go for the \$3k provided through MHFA since my salary is below the \$63k limit, and the one bank has \$3k available in a program...my instructor said the "most" she'd ever seen that had to be out of my pocket would be \$1,500.  I took the program to educate myself being single mom but also because it stated "up to possibly \$20k" down through programs.

Hope that helps & Thanks!
Message 5 of 17
Regular Contributor

## Re: Debt to income Ratio

Shane,

Thanks for your response.  I live in Florida (Central).  I want to stay within the 100,00-150,000 range.  I will go with a condo if that's all I can get.  I have 5,000 saved.  The county has a program for teachers where they will contribute \$7500. (I only have to stay in the place 5 years or I have to pay back the money.) They have 10,000 20,000 30,000 available for there's a 20 year commitment.  The rep said that if you move, sale, etc you have to pay the county back as well.  I would qualify for the 10,000 but I'm not going to commit to 20 years.  Anything could happen in twenty years......

On HUD's site they have the teacher next door program.  All the areas listed for Central Florida are (high crime, drugs, horrible, horrible neighbors.)  Getting 50% off the purchase price is good but the neighborhoods just aren't safe.

Do you know if any dpa programs in Florida and/or for teachers?

Thanks
Message 6 of 17
Super Contributor

## Re: Debt to income Ratio

beach123 wrote:
My debt long-term debt is \$563 but I possibly can bring \$100 of it down to NOT long-term debt...

I'm paying off the high interest auto loan since one bank said I only needed the 3 good tradelines...and yes, I'm trying to go for the \$3k provided through MHFA since my salary is below the \$63k limit, and the one bank has \$3k available in a program...my instructor said the "most" she'd ever seen that had to be out of my pocket would be \$1,500.  I took the program to educate myself being single mom but also because it stated "up to possibly \$20k" down through programs.

Hope that helps & Thanks!

Well if you are going for FHA then the \$563/mo in other payments is going to limit your purchase price to the \$120k range... that's not to say you couldn't qualify for more if you pass automated underwriting, but at the 43% debt to income ratio limit that FHA usually has in place that's the highest your income/debts could support.  What is your \$563/mo of debt made up of and will any of it be paid off within the next 10 months?
Mortgages (FHA, VA, USDA, Fannie, Freddie, Non-Prime) since 2002, based in Irvine, CA and lending in all 50 states

Information that is needed to determine if you qualify for a mortgage

Message 7 of 17
Super Contributor

## Re: Debt to income Ratio

camilleandbella wrote:
Shane,

Thanks for your response.  I live in Florida (Central).  I want to stay within the 100,00-150,000 range.  I will go with a condo if that's all I can get.  I have 5,000 saved.  The county has a program for teachers where they will contribute \$7500. (I only have to stay in the place 5 years or I have to pay back the money.) They have 10,000 20,000 30,000 available for there's a 20 year commitment.  The rep said that if you move, sale, etc you have to pay the county back as well.  I would qualify for the 10,000 but I'm not going to commit to 20 years.  Anything could happen in twenty years......

On HUD's site they have the teacher next door program.  All the areas listed for Central Florida are (high crime, drugs, horrible, horrible neighbors.)  Getting 50% off the purchase price is good but the neighborhoods just aren't safe.

Do you know if any dpa programs in Florida and/or for teachers?

Thanks

Yeah those teacher-next-door programs are good but if you have to fight for your life just to live there it's not worth it at any cost IMO.  Guess it depends on where you are from though... if you grew up in East L.A., well, it's probably like home.

I'm assuming of the ~\$560/mo you listed as your payment, \$460/mo is your car payment which could be excluded from your debt ratio... leaving \$100/mo left in cc payments.  Assuming that, then a \$150k condo is probably well within your reach.  Condos do have homeowners association (HOA) fees, which houses do not, but the important thing about condos is that they usually do not require a seperate insurance policy, and insurance is very expensive in most parts of Florida... which kind of cancels out the HOA fee.  Recently helped someone buy in Hernando County and their homeowners insurance on a \$180k home was \$2k/year, or \$167/mo.  HOA fees usually start around \$150/mo but can be as high as \$300+ depending on what type of community you buy in.

You can check out this link, http://ficoforums.myfico.com/fico/board/message?board.id=loans&thread.id=4726&view=by_date_ascending..., to see Florida down payment assistance programs.

Message Edited by ShanetheMortgageMan on 01-05-2008 08:57 PM
Mortgages (FHA, VA, USDA, Fannie, Freddie, Non-Prime) since 2002, based in Irvine, CA and lending in all 50 states

Information that is needed to determine if you qualify for a mortgage

Message 8 of 17
Established Contributor

## Re: Debt to income Ratio

My debt is now just starting for 3 years for \$463, the other one I can get under 10 months.  I'll have to come up with other measures then because there is nothing available where I need to live for that price

The one lender said I could qualify for \$141k with the debt ratio (thought I had a property for a steal at \$145k) but it's sold!

I'll just have to watch and be careful as I don't intend to get into any crap loan...I'd go 40 yrs too but it seems to make about a \$50/diff, but with the economy going in the tank \$50 is \$50!!

Thanks!
Message 9 of 17
Regular Contributor

## Re: Debt to income Ratio

Shane,

I'm in Orange County, FL.  Thanks for the info on the hbuying programs.  I signed up for a class next week through the county.  2 nights a week/ 3 hours long.  It's worth it!  It's also free.  The website also stated that they were out of funds, but another colleague said that they expectations for public service employees.  (thank goodness)

...After the Cap One charge off -falls off my equifax in March. (not showing on the other two)....I plan to get the ball rolling.....

You mentioned that you helped someone in Hernando County.  Do you fly out to Florida  prepare the documents?

Another Question.......
I was on realtor.com looking at houses in my zip code and came across this.

ORLANDO, FL 32822
MLS ID# S4625954

What exactly is a short sale?

Thanks for all you do!!!
Message 10 of 17