topic Re: First time home-buyer, high DTI in Mortgage Loans

First time home-buyer, high DTI

sgomez1325 — Thu, 24 Mar 2022 21:17:38 GMT

Looking at FHA loan. I spoke with lender and he said he may be able to work with DTI as high as 57% (I'm at about 52%) if I'm approved with the AUS. My question, is, is won't that be a red flag under the AUS? A high DTI???? He's making it sound like it won't be a huge deal. I guess if I were a lender and that would be an automatic red flag , I wouldn't advise my client to let me run their credit. I could be overthinking it though.

Also, that's the only issue on my credit. I have debt. My score is above the FHA guidelines, nothing deragatory.

Re: First time home-buyer, high DTI

Mortgage-Specialist — Thu, 24 Mar 2022 21:21:27 GMT

It'd not a red flag. Don't waste you're efforts worrying. Very common to have DTIs in the 50% range

Re: First time home-buyer, high DTI

Anonymous — Thu, 24 Mar 2022 22:32:38 GMT

@sgomez1325 max DTI for an FHA loan is 56.99%. You're disqualifed if it's over that (if it hits 57.00% DU won't render an approve/eligible).

Re: First time home-buyer, high DTI

CH-7-Mission-Accomplished — Fri, 25 Mar 2022 02:35:40 GMT

@sgomez1325 wrote:
Looking at FHA loan. I spoke with lender and he said he may be able to work with DTI as high as 57% (I'm at about 52%) if I'm approved with the AUS. My question, is, is won't that be a red flag under the AUS? A high DTI???? He's making it sound like it won't be a huge deal. I guess if I were a lender and that would be an automatic red flag , I wouldn't advise my client to let me run their credit. I could be overthinking it though.

Also, that's the only issue on my credit. I have debt. My score is above the FHA guidelines, nothing deragatory.

Getting approved at 52% DTI and actually being able to afford it are two different things. Please think very carefully.

Re: First time home-buyer, high DTI

donkort — Fri, 25 Mar 2022 20:10:50 GMT

Make darn sure it's a fixed-rate mortgage.

Many people who had high DTI's foreclosed because their interest rate went up drastically after a year or two. This was one of the causes of the 2008 recession.

Re: First time home-buyer, high DTI

MauiMan85297 — Fri, 25 Mar 2022 21:34:33 GMT

Interest rates can't go up if they're on a fixed rate. Back in 2008,2009 people walked away from their home because the values of the homes tanked and consumers felt that why should they continue to make payments on a home they were well underwater. If you could afford to make payments on a home, who cares on what the home is worth unless you're trying to sell it.

52% is a norm nowadays, there are regulations in place so you don't hang yourself with a mortgage payment that isn't doable.

Re: First time home-buyer, high DTI

donkort — Sat, 26 Mar 2022 00:14:14 GMT

I meant that some people were getting "adjustable rate" mortages (not fixed mortgages) back in 2008. The interest rate would change from year to year. It was affordable at the original rate----but if that rate, say, went up a percent or two in a year, it would become unaffordable.

Re: First time home-buyer, high DTI

Citylights18 — Tue, 29 Mar 2022 07:05:37 GMT

@MauiMan85297 wrote:
Interest rates can't go up if they're on a fixed rate. Back in 2008,2009 people walked away from their home because the values of the homes tanked and consumers felt that why should they continue to make payments on a home they were well underwater. If you could afford to make payments on a home, who cares on what the home is worth unless you're trying to sell it.

52% is a norm nowadays, there are regulations in place so you don't hang yourself with a mortgage payment that isn't doable.

They do not factor utilities into DTI.

All they really look at is housing payment, cars, loans and alimony if that is relevant.

I would concentrate on reducing loans right now. Interest rates are spiking and its eventually going to impact housing prices, especially on the lower end of the price spectrum.

When I look at rental properties online there are places that are up 82% in one year. From 100k to 182k in a year for condos in inexpensive areas. Wait until the next recesssion kicks in and they are cutting interest rates again.