Max DTI for 2014 Conventional Loan

[agekeith22]

We just sold our current home and will be beginning the building process in April 2014 on our new home. Is the max DTI 43% or 45% beginning in 2014 on conventional loans?

My credit scores are all around 750 and I plan on putting 5% down. I am trying to make sure the PITI I am estimating is reasonable in regards to being approved. I am not afraid of reaching max DTI since the child support I pay will end 2 years after I close on my new home and that will be an extra $900 that I will no longer pay out each month.
I do have options to reduce my DTI if the limit is 43% and not 45% such as refinancing my car note! but I would prefer not to do that.

[andyaycw]

Beginning January 10, 2014, QM (Quality Mortgages) for lenders kicks in, and is one of the requirements for lenders to stay within safe harbor, so that borrowers cannot sue the lender for having made a loan that the borrower can't afford. In other words, it's putting more responsibility on the lender to ensure that the borrower can actually afford the loan, otherwise, there is a 3-year time frame in which the borrower can go back and sue the lender if it turns out they actually couldn't afford that mortgage payment. One such requirement is that the max DTI is 43.00%.

This doesn't necessarily mean that lenders won't do loans over 43% DTI, however, it does mean that lenders (if they will still do the loan) will likely require substantial compensating factors to determine if you can actually afford the payment, whether it be substantial amount of reserves, etc.

Good luck. 

[agekeith22]

Yes, that is what I read, thanks for confirming. The 43% DTI is going to be close for the house we want. We plan to price out both a 30 year conventional with PMI and a 80/15/5 piggyback loan without PMI. For the record, I don't agree with being able to sue the lender, the borrower needs to have control and discipline and take responsibility for their decisions, both good and bad.

[DallasLoanGuy]

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@agekeith22 wrote:
 Is the max DTI 43% or 45% beginning in 2014 on conventional loans?

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we dont know yet....  rule isnt finalized

[agekeith22]

Dallas, that is promising to hear...  I will keep my fingers crossed.  This seems to be a regulation that would hurt the housing industry, not something that the goverment would want to do at this particular time. 

[boober]

This doesn't apply for HARP right?

[MyCreditSucksTheMost]

 if the rule is applied as currently stated, yes it will apply to harp if it's QM..

 any fannie mae or freddie loans will have dti caps on QM loans(per current speculated rules), but this will most likely open up a secondary sub-prime market.