Mortgage Loans

[Benjiiii]

1. Credit.  My TU FICO(TU08 model from walmart) was 746 this month, and EQ FICO(from DCU) was 772 in January - No deragatories on any of the reports
2. Income.  Gross income is currently $45k/year
3. Source of income.  Employment- I am salaried. 
4. Monthly debt payments.  $333/month in student loans, around $75 in credit cards(various 0% deals)
5. Employment Currently in accounting at the same company since I graduated with a double major in accounting and finance in May 2011 - it'll be two years come May.  
6. Assets/Reserves.  I have around $4,000 in savings and $8,000 in 401K 
7. Location.  Houston, TX
8. Property.  Single family house, will end up with either a Brighton or Pulte home
9. Value.  Within the $175-185k range
10. Occupancy.  Primary residence
11. Transaction Type.  Purchase

With all of that pertinent info, I'm curious as to how much I could truly be approved for.  The salesman for either of the builders stated they will basically cover the majority of the closing costs, and I found an awesome $15k down payment assistance program I qualify for through Wells Fargo.  I understand the lender bases one's DTI off PITI and all other liabilities, but as far as the PITI goes - does that include both MIP and HOA fees?  I know it includes hazard insurance and property taxes, as well as principal and interest.  Property taxes for the houses I'm looking at are in the 6500-6900 range and HOA will be $900/annually.  MIP should be around $2145 initially, and I intend to pay the upfront MIP with money from savings.  

I'm hoping, given my great credit, degree and line of work, the lender will give me a little leeway and approve me from that range I want.  

The PITI(including HOA and annual MIP) comes to $1606/month(180k house, 15k down, 3.25%, $6900/property taxes, $720/insurance)

What does everyone here think?  

[playboy]

Real quick math without knowing all of the particulars:

Your front end DTI: $1,608 (PITI, HOA, Hazard Ins)/($45,000/12)=3,750 per month = Front end DTI of 42.8%.

Back End DTI: $1,608 + all of the debt monthly payments that you have $408/$3,750 = $1,933/$3,750 = 53.76% 

So your DTI is 43/54.  That's really high.  I know that USDA is 29/41with some flexibilty on the back-end number depending on certain factors and FHA is 31/43.

[MovingForward_2012]

Yeah I agree that is a pretty high DTI. You gross about $3750 a month excluding the taxes, etc. that come out your paycheck.

What is your net (or take home) pay? It appears that $1607 is 50% of your take home pay. That's a lot on a $45K a year salary. My mortgage payment is $2385 per month but I make $8000 a month gross and my mortgage payment is a stretch for me. But if I max out my DTI, I am still leftover with more money than if you maxed out your DTI. Hopefully that makes sense.

Once you pay your mortgage payment, bills, and utilities, you won't have much money left over for other things like groceries, and entertainment.

Do you have any money you can put down?

[TnTNYC]

Agree - That is a pretty tight financial situation.  You may be better off 1) saving for longer and/or 2) setting your sights a little lower, say the $125-$130K range.  The last thing you want to do after you get a new home is to celebrate by not being able to afford anything else.

Living on a tight debt-to-income ratio can cause serious, cascading issues when unexpected payments/needs arise, even if they seem small on their own.

[jadeite788]

Honestly even though my credit scores are lower than  yours, I make about 39K and my student loans is $655 a month, and I will have about $5K in reserves by closing.  Right now I am trying to get on the IBR program.  I can tell you my LO told me over the phone verbally at this rate my quote was $80K, and I am trying to get the $100K preapproval letter, and I have to make certain steps towards that.   I agree with some of the other posters, you might get qualified for $100K-135K, anything more might be pushing it on the DTI.

[Benjiiii]

Thank you for the responses.  

There is absolutely no way I would be putting myself in this situation by myself - my soon-to-be fiance and I have lived together for the last 5 years.  Unfortunately, her credit is horrible so I'm going to be the only one on the mortgage.  I have heard of some lenders going as high as 55% on the back-end DTI, presuming strong supporting factors.  I might end up settling for a $170k house, as that would put my DTI at less than 50% - maybe I can have the homebuilder throw in some complimentary upgrades haha.  

[JM-AM]

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Benjiiii wrote:

Thank you for the responses.  

There is absolutely no way I would be putting myself in this situation by myself - my soon-to-be fiance and I have lived together for the last 5 years.  Unfortunately, her credit is horrible so I'm going to be the only one on the mortgage.  I have heard of some lenders going as high as 55% on the back-end DTI, presuming strong supporting factors.  I might end up settling for a $170k house, as that would put my DTI at less than 50% - maybe I can have the homebuilder throw in some complimentary upgrades haha.  

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It is very possible!

I have seen it done...

[MovingForward_2012]

That makes the home prices feasible OP. I didn't know there was secondary income coming from your fiancé. So you can max it out but you should calculate your lower DTI based on the combined income you both make to ensure your combined DTI is 43% on the back end. Even though she will not be on the loan, it helps ensure that you will both live comfortably in the new home.

[Benjiiii]

With her income combined with mine(she is still in school, so she doesn't make much), we are looking at a 28% front end ratio and 43% back end ratio with all her monthly obligations, as well as mine.  Unfortunately, the lender won't see that, hence why I'm worrying a bit about such a high back end DTI.  

[JM-AM]

Just call a few LO's or Brokers up and see what they can or cant do for you.