topic Re: DTI Conventional Loans in Mortgage Loans

DTI Conventional Loans

Lynnow — Wed, 14 Oct 2020 22:00:21 GMT

I was reading on Facebook a post from one of my realtor friends that said most conventional loans are being approved for up to 50% DTI right now. Is this true?

My husband and I have 10,200 monthly income and 3% DTI. Does that mean we can get approved for a payment up to 4794 (47%)? I would NOT want that payment (that sounds insane to me that's why I was wondering if the 50% DTI is real) but I am just wondering if that's what a conventional preapproval letter will say or if that's how it works.

Our credit is pretty clean. My scores are lower. Thanks to this forum My Middle mortgage score rose to 719 AND my FICO 8 scores have increased even more this week so my mortgage scores may have as well. I can't see until next month due to subscription.

Re: DTI Conventional Loans

dragontears — Wed, 14 Oct 2020 22:01:20 GMT

@Lynnow wrote:
I was reading on Facebook a post from one of my realtor friends that said most conventional loans are being approved for up to 50% DTI right now. Is this true?

My husband and I have 10,200 monthly income and 3% DTI. Does that mean we can get approved for a payment up to 4794 (47%)? I would NOT want that payment but I am just wondering if that's what a conventional preapproval letter will say or if that's how it works.

Our credit is pretty clean. My scores are lower. My Middle mortgage score is 719 but my FICO 8 scores increased so my mortgage scores may have as well. I can't see until next month due to subscription.

Preapproval letters are normally tailored for the property that you are making an offer on. Your lender will tell you what the maximum amount you qualify for is but a buyer won't know due to the preapproval letter.

Also not every lender will go to the highest DTI.

Re: DTI Conventional Loans

Lynnow — Wed, 14 Oct 2020 22:05:37 GMT

Oh!! I had no idea. So we shop first then ask for a preapproval when we are interested in a house?

Re: DTI Conventional Loans

dragontears — Wed, 14 Oct 2020 22:14:58 GMT

@Lynnow wrote:
Oh!! I had no idea. So we shop first then ask for a preapproval when we are interested in a house?

A lot of realtors won't show properties until you have a preapproval. Also in some markets you need to move fast so you need a lender that already has your information so you can get the letter fast to go with your offer.

You should figure out what your budget is based on the size of the house you want and the monthly payment you are comfortable with (I have had lenders try to talk me into a larger budget than I was comfortable with, I ditched those lenders). Look online on sites like zillow or realtor to get an estimate of the property taxes for the size of the house you are looking at as the DTI is based on PITI (principal, interest, taxes, insurance).

Re: DTI Conventional Loans

dragontears — Wed, 14 Oct 2020 23:55:46 GMT

@Lynnow

I completely forgot to explain about front end vs back end DTI

Front end DTI is PITI and most lenders cap it at ~28% (there can be some wiggle on this)

Back end DTI PITI plus all other debts, the 50% DTI you hear about is backend not front end.