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Regular Contributor
Posts: 115
Registered: ‎04-30-2008
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High DTI with Good Credit

How much does having a good credit score influence getting a mortgage loan, even if you have a high DTI?

 

I'm not getting a mortgage now, but I'm just doing my research and trying to get my ducks in a row before I do so.  Currently I have a lot of debt and I've been working dligently to pay it dow.  In a couple of months I've paid of $7K of debt:smileyhappy:

 

I am putting money aside for a down payment and paying extra on my debt to accelerate the process, but I just wanted to know what the lenders look at.  My credit score was lower than usual when I last checked at 714 TU and 703, but it's usually around 730 (and will probably go up b/c the extra debt I just paid off).  I have a car loan, personal loan and credit card debt.  I've never paid a bill late.

 

Thanks everyone.  These forums are wonderful and have really helped me focus on bigger and better things! :smileyhappy:


Starting Score: 703
Current Score: 7/8/10: TU - 738 EQ - 750
Previous Score: 1/22/10: TU - 703 EQ - 714
Goal Score: 750


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Valued Contributor
BrianB_The_Loan_Professor
Posts: 1,381
Registered: ‎07-29-2008
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Re: High DTI with Good Credit

Completely seperate one does not help the other - however having a good score will help you to get an automated approval which may allow for a few more percentage points of DTI but you dont need a great credit score to get this in most cases

How high are you talking? You should be fine with a combined (including housing) of up to 45%

 

B

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Brian B The Loan Professor
Mortgage Banker Lending in all 50 states -
Regular Contributor
Posts: 115
Registered: ‎04-30-2008
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Re: High DTI with Good Credit

Mine DTI would be about 55% with a mortgage payment.  I know this is high, which is why I'm working to pay down my debts.  My student loans is a big chunk of my debt at $365/mo, as well as my car payment $430/mo, which I will refinance in about a year to lower the pmt (maybe).  I'm also paying down credit card debt that I had accumulated in college and right after.  Currently I pay about $400/mo in credit card debt and a personal loan which will be paid off completely in 3 years, hopefully sooner). 

 

I make $46/yr gross. 

 

Like I said, I'm not buying a condo in the next six months, more than likely next year, but I want to start planning my finances accordingly.


Starting Score: 703
Current Score: 7/8/10: TU - 738 EQ - 750
Previous Score: 1/22/10: TU - 703 EQ - 714
Goal Score: 750


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demo18c
Posts: 79
Registered: ‎03-06-2008
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Re: High DTI with Good Credit

I have been DU approved with 55% dti and a mid score of 680. I think the overall packet was strong so it went thru.

Starting Score: 690
Current Score: 747
Goal Score: 750


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Valued Contributor
BrianB_The_Loan_Professor
Posts: 1,381
Registered: ‎07-29-2008
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Re: High DTI with Good Credit

How long ago was your DU approval? There was a recent change by Fannie Mae capping it at 45%

 

LP still will go to 55% but many banks have followed fannies 45% and by the time OP is ready to buy LP (Freddie) probably will have as well

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Brian B The Loan Professor
Mortgage Banker Lending in all 50 states -
Contributor
demo18c
Posts: 79
Registered: ‎03-06-2008
0

Re: High DTI with Good Credit

It was the first week of Jan. I also forgot to mention that it was a VA loan so I am not sure if that matters or not

Starting Score: 690
Current Score: 747
Goal Score: 750


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New Contributor
crichter
Posts: 133
Registered: ‎09-22-2009
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Re: High DTI with Good Credit

What rate are you using to calculate your DTI?   What mortgage insurance factor (if applicable) as those are going up too? 

 

DTI calculations over time are tough since we need to forecast.  Is your 55% based on today's 5% rates?  Next year's rate of x%? 

 

 

 


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