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FHA, with high DTI passed Automatic Underwriting, should I worry, or am I ok?

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flippy1234
Established Member

FHA, with high DTI passed Automatic Underwriting, should I worry, or am I ok?

Hey, quick background. I'm building a house, was approved, or pre-approved for a mortgage when we signed the contract back in February, and since I'm using the builders reccomended lender I'm covered in case something doesn't get approved with the loan and would get my deposit/earnest money back.

 

My husband runs his own business, but it hasn't been 2 years yet, so we can't use any of his income for the loan, however we have to use all of his debts, plus we are co-signed on a car loan for my step-daughter and both have a bunch of student loan debt. Just wanted to explain why the DTI is so high, so I don't get yelled at for trying to buy a house way over what we can afford Smiley Wink

 

When I talked to the lender last week he said it passed through his automatic underwriting system and it just needed to get sent to the underwriter for them to verify things. My DTI is 27/56. He even mentioned that I was just barely there on the DTI but since I was "in the box" I should be fine. My mid score is 680, and at this point we are getting money back at closing since the builder is paying closing costs and we've given them more than 3.5% in deposit/earnest money. I should also add that there are 0 late payments or negative accounts on my credit, no collections or anything like that, so the only thing I'm really worried about it the DTI. 

 

I already have a closing date from the builder of 10/28, but I'm super hesitent to give my 30 days notice at my current rental house in case this falls through, however if I don't give them notice this week then I might get stuck paying rent for November when I would be in my new house. So, hopefully I hear back this week from the lender/underwriting, but what do you think, does automatic underwriting mean I'm good? I'm just nervous because the DTI is SO high. The lender didn't sound worried... but of course I am. 

 

Message 1 of 14
13 REPLIES 13
coachhenson
Regular Contributor

Re: FHA, with high DTI passed Automatic Underwriting, should I worry, or am I ok?

I'm closing on an FHA loan Friday with a high DTI. I was in a similar boat.  Loan officer was right.

Message 2 of 14
flippy1234
Established Member

Re: FHA, with high DTI passed Automatic Underwriting, should I worry, or am I ok?

Thanks, that gives me hope Smiley Happy

Message 3 of 14
mrsmajor
New Member

Re: FHA, with high DTI passed Automatic Underwriting, should I worry, or am I ok?

Same her simular dti with 3.5 percent rate on fha will be closong on the 5th so you shouldnt be worried



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Message 4 of 14
coachhenson
Regular Contributor

Re: FHA, with high DTI passed Automatic Underwriting, should I worry, or am I ok?

We signed our final closing disclosure on Tues. evening, took care of the closing cost wire today, signing paperwork tomorrow morning.  High DTI, too.  You will be fine.  Good luck!

 

Message 5 of 14
flippy1234
Established Member

Re: FHA, with high DTI passed Automatic Underwriting, should I worry, or am I ok?

Thanks! and congrats on closing on your house. 

 

PLOT Twist. Came in to work today to an almost $10k a year raise, lol. I emailed my loan officer in case it will make a difference at this point, but really they couldn't have given me the raise a month ago?

Message 6 of 14
CaliforniaLoaner
Valued Member

Re: FHA, with high DTI passed Automatic Underwriting, should I worry, or am I ok?

They won't use future income until they see it on a paystub. A lot of mortgage fraud came from allowing this in the past, even though other programs are getting looser with it now.

 

Regarding underwriting, the high DTI isn't necessarily so much the issue as mistakes from not being thorough enough would be. The most common would be an undisclosed debt that's discovered later on, such as another home that is free and clear but didn't make it on the application because people don't think of it as a debt. It does need to be included because property taxes and insurance on other properties are taken into the DTI calculation.

 

Another instance would be student loans if you have them. FHA takes a much higher calculation than what your monthly payments might be, and it's up to the loan officer to update that information.

 

Hopefully this helps - you really are most likely just fine, especially with a raise coming. Very worst case scenario you just wait for your updated paystub and delay closing and pay a penalty.

Message 7 of 14
flippy1234
Established Member

Re: FHA, with high DTI passed Automatic Underwriting, should I worry, or am I ok?

Thanks cweber! The raise will actually hit my paycheck tomorrow, so I already have an updated pay stub, regardless of that I can't think of anything else they missed debt-wise. The student loan debt is part of the reason the DTI is so damn high. Thanks for the reassurance. Smiley Very Happy 

Message 8 of 14
CaliforniaLoaner
Valued Member

Re: FHA, with high DTI passed Automatic Underwriting, should I worry, or am I ok?

You got it Smiley Happy Congrats on the new home!

Message 9 of 14
flippy1234
Established Member

Re: FHA, with high DTI passed Automatic Underwriting, should I worry, or am I ok?

Update: approved with conditions, he said he will follow up Monday with what those are. Based on what I've heard and read on here, and his attitude I'm not worried. Almost there.
Message 10 of 14
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