Dti Question

[jnc]

So, if I am finding accurate information, the dti max for an FHA loan is 31% for the mortgage/tax/insurance/hoa  and 43% for all debts.

Does this mean, we will not qualify for any more than 31% on the house, even if we have zero other debts?

[BrianB_The_Loan_Professor]

No if the file is strong the number can be higher - you probably wont get an approval with housing at the full 43% but 36-38% may get through.

The automated system must give an approval for you to exceed the published DTI limits.

Pretty common though - 

Brian

[jnc]

Thanks.

I don't imagine our file would possibly be considered 'strong' any time before our foreclosure falls off in 2016. Hoping to purchase before then.

We could probably find a house around the 31% mark but... we have 4 kids so finding a house with enough space limits us a bit and I was hoping we might be able to stretch that just a tad

[StartingOver10]

jnc you can have a strong file before your foreclosure falls off in 2016.

All you need to have are compensating factors to overcome the foreclosure issue to make it 'strong'.  For example, if you have 10% to put down rather than 3.5%, that is considered a compensating factor.

Don't discount the value of time. If your f/c is falling off in 2016 that means it is more than 5 years old. Since mortgages are given routinely 3 years post f/c with FHA, you shouldn't have an issue even with 3.5% down. You have no other debt. I assume you have rebuilt your credit over the past five years. 31% is not cut in stone. Don't eliminate yourself from getting a mortgage. Make application with a correspondent lender (that funds their own loans) and see where you stand. Good luck. Don't lose hope.

[jnc]

The foreclosure will fall off mid to late 2016 so we're not quite 5 years out yet... but will be when we apply.

I have managed to bring us back up to 673 so far, from somewhere in the mid 500s so we're definitely improving the credit.  Hoping to get us into the 700s before we apply for a mortgage.

We do still have debt to pay down but it should be almost, if not fully paid by this time next year! I'm hoping that will give us a nice boost to the score.

Thanks for the info. I won't put all my hope into getting more than 31% but its nice to know its not outside the realm of possibility!

[StartingOver10]

I see loans approved all the time at front end >31% for an FHA loan.