topic Re: What is considered a good debt to income ratio in Mortgage Loans

What is considered a good debt to income ratio

Anonymous — Tue, 16 Sep 2008 23:25:41 GMT

Hello All!

What is considered a good debt to income ratio?

I tried to figure mine out and came up with 13%. My mortgage guy said I have a really low debt to income ratio and that could work in my favor with a mortgage loan. I really only have a car loan (with my husband) and a student loan and two very very small CC ( under $150.00 each).

We are applying for a small mortage for our debt to income ratio according to the morgage guy. Is he right? will applying for a smaller mortgage for our income help us out a little?

Thanks!!

Re: What is considered a good debt to income ratio

Anonymous — Wed, 17 Sep 2008 00:50:19 GMT

Every lender has a differnt policy, but they want to see something smaller than 36% (including mortgage). But if you have a high income, they may go up to more to 40-45% or so.

Re: What is considered a good debt to income ratio

DallasLoanGuy — Wed, 17 Sep 2008 13:38:40 GMT

@Anonymous wrote:
Every lender has a differnt policy, but they want to see something smaller than 36% (including mortgage). But if you have a high income, they may go up to more to 40-45% or so.

inaccurate. someone with a 'high income' doesnt get special privileges. if you have large assets, that can indeed compensate for a hight dti

Re: What is considered a good debt to income ratio

DallasLoanGuy — Wed, 17 Sep 2008 13:39:40 GMT

@Anonymous wrote:
Hello All!

What is considered a good debt to income ratio?

I tried to figure mine out and came up with 13%. My mortgage guy said I have a really low debt to income ratio and that could work in my favor with a mortgage loan. I really only have a car loan (with my husband) and a student loan and two very very small CC ( under $150.00 each).

We are applying for a small mortage for our debt to income ratio according to the morgage guy. Is he right? will applying for a smaller mortgage for our income help us out a little?

Thanks!!

dti is one factor. along with cash reserves and credit and length of employment, ect. certainly, a low dti will be seen as a positive.

Re: What is considered a good debt to income ratio

Anonymous — Thu, 13 Oct 2011 00:26:42 GMT

I can't believe there are people out there with two-thirds of their income as extra money to spend. I'm shocked. 36%? I honestly don't know anyone who carries a debt including their mortgage/rent of only 36% of their income, except drug dealers.

Re: What is considered a good debt to income ratio

llecs — Thu, 13 Oct 2011 00:37:56 GMT

@Anonymous wrote:
I can't believe there are people out there with two-thirds of their income as extra money to spend. I'm shocked. 36%? I honestly don't know anyone who carries a debt including their mortgage/rent of only 36% of their income, except drug dealers.

Remember, that two-thirds isn't necessarily excess cash that's laying around. You'll have other expenses not factored into DTI like food, clothing, gasoline, utilities, insurances, kid's schooling, vacation, travel, misc., etc.

Re: What is considered a good debt to income ratio

Anonymous — Thu, 13 Oct 2011 00:38:51 GMT

That's 36% of gross (pre-tax, pre-insurance, pre-401k, etc.) income. Just take your yearly salary and divide by 12. 36% of that will be closer to 2/3 of your take home probably.

Re: What is considered a good debt to income ratio

Anonymous — Tue, 17 Jul 2012 15:36:27 GMT

We do...and with three kids on one income...DTI is 26%. We live nicely in a suburb of Minneapolis, and we enjoy life. Why be house-poor?

Re: What is considered a good debt to income ratio

webhopper — Tue, 17 Jul 2012 21:16:39 GMT

My husband and I have a total debt ratio of 32.6%

This includes 2 mortgage payments for two separate homes, one car payment, and one student loan payment. We have anywhere from 70k-100k in house equity depending on the month and our local market. We also have over 30k in vehicle equity, we both drive fairly new vehicles that are paid for, and we have a truck, which still has a note. I also have about 75k in retirement investments...

For me, I am very conservative due to my mistakes in the past. My husband is very conservative because he really doesn't care about posessions, other than guns. He has a gun collection worth about 40kish Having a lot of available discretionary income is great and I would never go back to living on the edge. I have always bought used vehicles instead of new. I've always done without the latest fashions... Our clothing budget is less than $800 dollars a yr. My husband loves to hunt, we don't buy meat at the grocery store.

also, having the two houses poses greater financial risk than having just one mortgage to pay for. So we basically budgeted so that we can make both mortgage payments even if both sides of the duplex are vacant.

I agree that there is no point in being house poor and stressed out. Your family and your marriage will thank you for choosing less than what mortgage brokers tell you you can "afford"

We don't look at this as extra money to "spend" We look at this as extra money to save for retirement and donate to charity or churches. Last year we donated $500 to Toys for Tots and $200 to the local food bank to provide turkeys for thanksgiving to the shelter.

My husband is 34, and I'm 30... my goal is to be a millionaire several times over one day. Joey doesn't care how much money we have, since he has enough guns and ammo to fend off the zombie apocolypse. :/ ROFL (I'm not kidding about the last statement)

Re: What is considered a good debt to income ratio

tooleman694 — Tue, 17 Jul 2012 22:31:36 GMT

When I close on my home, my DTI will be around 45 percent.

Still have lots of extra cash around to do whatever and save.

Re: What is considered a good debt to income ratio

Anonymous — Tue, 17 Jul 2012 22:57:40 GMT

@Anonymous wrote:
I can't believe there are people out there with two-thirds of their income as extra money to spend. I'm shocked. 36%? I honestly don't know anyone who carries a debt including their mortgage/rent of only 36% of their income, except drug dealers.

Really?

Mine is 38%. It's not that I have extra money to spend. That money has to cover food, utilities, fuel, entertainment, etc. I carry a very small amount of debt.

I think I'm shocked more in the other direction -- I get nervous that it feels like I don't have enough money. I can't imagine how stressful it would be to have more than that percentage.

Re: What is considered a good debt to income ratio

tooleman694 — Tue, 17 Jul 2012 23:51:57 GMT

Its called a budget.

Re: What is considered a good debt to income ratio

webhopper — Wed, 18 Jul 2012 04:04:49 GMT

@tooleman694 wrote:
Its called a budget.

+1000

Re: What is considered a good debt to income ratio

HumbleLobster — Wed, 18 Jul 2012 13:43:46 GMT

Based on my preapproval our backend DTI will be around 40%. My LO said that they process all the way through 43% (Wells Fargo) without much fuss. One of the things that actually makes that number over inflated is that my wife didn't qualify to be on the loan since her credit history is too short, and as a result its in my name only. With both of us the DTI falls to around 26%.

Re: What is considered a good debt to income ratio

tooleman694 — Wed, 18 Jul 2012 15:05:26 GMT

Once thing to remember is that someone earning 50k a year with a 45 % DTI VS someone earning 100k a year with a 45 % is a huge difference. The guy earning 100k is still gonna have a lot of cash left over.