topic Re: front and back end dti- CONFUSED in Mortgage Loans

front and back end dti- CONFUSED

Anonymous — Wed, 09 Nov 2016 17:17:07 GMT

Can someone please help me understand what goes into these calculations?

thank you

Re: front and back end dti- CONFUSED

MauiMan85297 — Wed, 09 Nov 2016 17:32:49 GMT

Front end DTI is your income (gross monthly) divided by your monthly debts that show on your credit report and any debts you may owe monthly that doesn't appear on CR (IRS repayment plan). Backend is this plus what your expected new mortgage payment would be.

Re: front and back end dti- CONFUSED

Anonymous — Wed, 09 Nov 2016 17:35:40 GMT

Front-end Ratios

Front-end ratios calculate the amount of gross income that goes towards housing costs. For a homeowner, the front-end ratio can be calculated by adding up all housing expenses such as mortgage payments, taxes, and insurance, and dividing it by the homeowner’s gross income.

For example, a consumer with a monthly gross income of $4,000, who owes $1,500 in monthly mortgage payments, would have a front-end DTI ratio of 38 percent.

Back-end Ratios

Back-end ratios calculate the amount of gross income that goes towards paying all monthly debt payments, including housing costs, credit card payments, car loans, student loans, and any other debts.

For example, a consumer with a monthly gross income of $10,000, who has $3,500 in monthly liabilities (a $2,000 monthly mortgage payment and $1,500 in credit card and monthly auto loan payments), would have a back-end DTI ratio of 35 percent.

http://loans.org/mortgage/questions/what-are-debt-income-ratios

Re: front and back end dti- CONFUSED

Anonymous — Wed, 09 Nov 2016 17:36:52 GMT

@gsully00 wrote:
Front end DTI is your income (gross monthly) divided by your monthly debts that show on your credit report and any debts you may owe monthly that doesn't appear on CR (IRS repayment plan). Backend is this plus what your expected new mortgage payment would be.

thank you. so what are the dti requirements for a FHA loan?

Re: front and back end dti- CONFUSED

StartingOver10 — Wed, 09 Nov 2016 18:41:08 GMT

^^No ashley_c, Southeast has it right: front end is your housing ratio and back end is your total debt ratio.

Re: front and back end dti- CONFUSED

Anonymous — Wed, 09 Nov 2016 18:54:56 GMT

@StartingOver10 wrote:
^^No ashley_c, Southeast has it right: front end is your housing ratio and back end is your total debt ratio.
Do you know Do you know what the appropriate ratios are for a FHA loan?

Re: front and back end dti- CONFUSED

Anonymous — Wed, 09 Nov 2016 19:12:40 GMT

Nevermind I see the requirements on the article.

so if i have a front end ratio of 20% and a back end of 47% that would disqualify me from a FHA loan?

for exanple if my gross mo income is 5878 and my estimated mortgage and insurance is $1200 thats a front end ration of 20%.

back end I included $1200 mortgage, $550 student loans ( 1% of balance) $660 car note, $180 federal tax repayment plan, and $150 in credit cards that equals to 47% in my calculations which is 4% over. that 4% could disqualify me???

Re: front and back end dti- CONFUSED

StartingOver10 — Wed, 09 Nov 2016 19:17:42 GMT

@Anonymous wrote:
Nevermind I see the requirements on the article.

so if i have a front end ratio of 20% and a back end of 47% that would disqualify me from a FHA loan?

for exanple if my gross mo income is 5878 and my estimated mortgage and insurance is $1200 thats a front end ration of 20%.

back end I included $1200 mortgage, $550 student loans ( 1% of balance) $660 car note, $180 federal tax repayment plan, and $150 in credit cards that equals to 47% in my calculations which is 4% over. that 4% could disqualify me???

^^No, those ratios don't disqualify you at all.

FHA allows back end ratios to go as high as 56.99%. Some lenders have overlays reducing the maximum back end to 55% or even 50% but that reduction is lender specific.

Re: front and back end dti- CONFUSED

MauiMan85297 — Wed, 09 Nov 2016 19:49:56 GMT

@StartingOver10 wrote:
^^No ashley_c, Southeast has it right: front end is your housing ratio and back end is your total debt ratio.

That's correct, I was juggling stuff on the phone and meant to add mortgage calc in the front end and meant to say including all bills, IRS plus mortgage for back end. Thanks for the correction.