Pre-qualified but worried I won't get approved

[Anonymous]

So I was prequalified for a house (with my fiance) of $280,000 with a 20% down payment, so a mortage of $224,000. The lender reviewed our credit scores, income, and loans on our credit report, and we were prequalified...but obviously didn't give the scrutiny that would be given to the actual mortgage application.

I'm a bit worried because we have a large amount of loans and our debt to income may be too high.

Stats:

Our credit scores are about 735 and 760

Our combined income is between 115k and 120k

We have a full 20% to put down as a gift from parents, will have about 25k cash in reserves, and another 50k in stocks in my name

All sounds good, but heres the kicker:

Total monthly debt (student loans, car loans, etc.) - about 2,400

I am hoping the fact that we will be putting 20% down, and have about 75k afterwards will help us overcome the high debt per month.

Anyone with some knowledge have any insight, it's just making me feel uneasy. Thanks

[Anonymous]

$120k is $10k per month. 

40% (conservative DTI limit) of $10k is $4000.

$4000 - $2400 = $1600 remaining towards the mortgage. The price range you are looking at will probably cost you around $1400/month PITI.

You will be fine if DTI is your only concern. You may even be able to afford a little more house (not that you should of course, but you probably could). Good luck!

[Anonymous]

Thanks for the reply.

The home (its a condo) we are looking at is just below 280, and would come to a loan of 222,000 @ about 4%

I have the estimate at $1,060 a month for mortgage + $411 HOA fees + $360 taxes = about $1830 a month, putting us over the $1600 you mention above.

I've read the max DTI they will lend at is 43% and I think i calculated ours at like 45 or 46% including the mortage hoa fees and taxes...but we also have the reserves and assets so I was hoping that would help. Wasn't sure if that 43% was a strict cutoff or they would go higher on case by case basis.

Thanks

[merc64]

I would ask your LO as he/she is the only one who can answer this question for you. Also, I'd go over your debts and possibly use some of your reserves to pay it down for DTI purposes. Again, your LO can be beneficial in this area by giving you insight on where you are and what you may need to do.

[StartingOver10]

---

@Anonymous wrote:

Thanks for the reply.

@Anonymous home (its a condo) we are looking at is just below 280, and would come to a loan of 222,000 @ about 4%

I have the estimate at $1,060 a month for mortgage + $411 HOA fees + $360 taxes = about $1830 a month, putting us over the $1600 you mention above.

I've read the max DTI they will lend at is 43% and I think i calculated ours at like 45 or 46% including the mortage hoa fees and taxes...but we also have the reserves and assets so I was hoping that would help. Wasn't sure if that 43% was a strict cutoff or they would go higher on case by case basis.

Thanks

---

Is there any way you could reduce the $2400 monthly debt? Pay off something?  At 43% DTI it looks like your front end works but you are really squeaking in there with not a lot of room. You do have some compensating factors (20% down).

I'll let dpeezy answer you in more detail because I am in over my head on this one

[Anonymous]

Those HOAs could possibly be a deal breaker. It really depends on the lender overlays and whether they get a DU (automated underwriting) approval. You may still be okay, but is there anyway you can pay down some debt? Refinance one of the cars maybe?

[Anonymous]

Thanks  for the replies guys...Ill look into some of those options.

[Anonymous]

Lost password...so i have a question

Will a LO work with you? Like if we don't qualify as is...but will he tell me if i ask him questions like if i pay off my car and get rid of that payment if we will qualify?

[StartingOver10]

---

@Anonymous wrote:
Lost password...so i have a question

Will a LO work with you? Like if we don't qualify as is...but will he tell me if i ask him questions like if i pay off my car and get rid of that payment if we will qualify?

---

Oh yes!  LO's are part of your team of professionals! They want to help you get a loan

[Anonymous]

Oh good to hear...if we don't get approved as it is then paying off one car with only 2 yrs left on loan would get rid of 320 a month and hopefully be enough..thanks again