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How to take the guesswork out of my Debt to income ratio?

jdot457
Member

How to take the guesswork out of my Debt to income ratio?

I want to apply for auto loan with Navy Federal , been a member since Dec 2020 I earned $50k last year, looking at my bank statements i have no idea how to determine my debt to income ratio. How do I take the guess work out so I have a rough estimate on what I may qualify for. Im in the 702-722 Credit score range, this will be my first auto loan. 

Message 1 of 11
10 REPLIES 10
sccredit
Valued Contributor

Re: How to take the guesswork out of my Debt to income ratio?

Simple DTI-

Housing/Mortgage Monthly Payment+

Installment Loans (Auto, Student loans, personal loans)+

CC Payments showing on credit report=

Monthly Debt Obligations

 

Dive that by your monthly income to come up with a percentage

 

That percentage is your DTI

 

Ch 7 Discharge 3/12/2018
Cap One VentureOne $3,500, CapOne Savor $5,300, Kohls $3,000, BBVA $2,500
Infiniti Financial Lease
Goal: New Mortgage 3/2022
Message 2 of 11
Slabenstein
Valued Contributor

Re: How to take the guesswork out of my Debt to income ratio?

Your bank statements shouldn't have anything to do with your DTI, unless that's what that lender uses to determine income.  DTI is just the ratio of all your monthly payments, as shown on your credit report at the time that they pull it, plus what the payment on the loan you're applying for will be, plus your rent, if you have any, to your monthly income.


Message 3 of 11
jdot457
Member

Re: How to take the guesswork out of my Debt to income ratio?

"CC Payments showing on credit report=

Monthly Debt Obligations"

What if I have a recent $10k card that hasn't posted yet? 

Also new Discover card showing $4k with 0 balance but was never used since I didn't do Form 4506 since I wasn't in business for 2yrs. They emailed me few days ago they are closing that card. So I want to get the auto loan before that affects me. I started business last year so I felt I wasn't going to qualify so I didn't bother with the form altogether 

Message 4 of 11
Slabenstein
Valued Contributor

Re: How to take the guesswork out of my Debt to income ratio?

When you say "recent $10k card", do you mean $10k balance or $10k limit?  Either way it won't be visible for them to include in your DTI until it reports.  Once it does, the number that will be included in your DTI will be the monthly payment as shown on your credit report.  For a $10k balance this could be quite a bit.  For a new card w/ a $10k limit, it will be the minimum payment for whatever balance posted at first reporting.

 

The Disco card w/ a $0 balance won't be included in DTI, since the minimum payment on $0 is $0.


Message 5 of 11
Horseshoez
Established Contributor

Re: How to take the guesswork out of my Debt to income ratio?


@jdot457 wrote:

"CC Payments showing on credit report=

Monthly Debt Obligations"

What if I have a recent $10k card that hasn't posted yet? 

Also new Discover card showing $4k with 0 balance but was never used since I didn't do Form 4506 since I wasn't in business for 2yrs. They emailed me few days ago they are closing that card. So I want to get the auto loan before that affects me. I started business last year so I felt I wasn't going to qualify so I didn't bother with the form altogether 


It's real simple, if you don't owe money, then it isn't debt.  If you have a line of credit with a limit of a million dollars and you don't owe anything on that line of credit, then the debt is zero.

I categorically refuse to do AZEO!

Message 6 of 11
jdot457
Member

Re: How to take the guesswork out of my Debt to income ratio?


@Slabenstein wrote:

When you say "recent $10k card", do you mean $10k balance or $10k limit?  Either way it won't be visible for them to include in your DTI until it reports.  Once it does, the number that will be included in your DTI will be the monthly payment as shown on your credit report.  For a $10k balance this could be quite a bit.  For a new card w/ a $10k limit, it will be the minimum payment for whatever balance posted at first reporting.

 

The Disco card w/ a $0 balance won't be included in DTI, since the minimum payment on $0 is $0.


What about if I'm an authorized user on my aunt's two cards $15,500 14%UT and $5,100 1% UT both NFCU
my NFCU card is $3k 12% UT and

self lender card $100 25%, $25 activation fee when I opened the card. 

All other cards Are zero or haven't posted yet .

 

my student loans are $9k but in deferment 

Message 7 of 11
Slabenstein
Valued Contributor

Re: How to take the guesswork out of my Debt to income ratio?


@jdot457 wrote:

@Slabenstein wrote:

When you say "recent $10k card", do you mean $10k balance or $10k limit?  Either way it won't be visible for them to include in your DTI until it reports.  Once it does, the number that will be included in your DTI will be the monthly payment as shown on your credit report.  For a $10k balance this could be quite a bit.  For a new card w/ a $10k limit, it will be the minimum payment for whatever balance posted at first reporting.

 

The Disco card w/ a $0 balance won't be included in DTI, since the minimum payment on $0 is $0.


What about if I'm an authorized user on my aunt's two cards $15,500 14%UT and $5,100 1% UT both NFCU
my NFCU card is $3k 12% UT and

self lender card $100 25%, $25 activation fee when I opened the card. 

All other cards Are zero or haven't posted yet .

 

my student loans are $9k but in deferment 


Whether AU cards will be counted will depend on the lender.  For the NFCU and Self Lender cards, they will use the minimum payment for those cards that is shown on your credit report at the time that they pull it.  You can check your ACRs yourself to see what they would be right now.  For your student loans, b/c they're in deferment how their monthly payments will be calculated will also depend on the lender, but many use 1% of your total balance.


Message 8 of 11
jdot457
Member

Re: How to take the guesswork out of my Debt to income ratio?


@Slabenstein wrote:

@jdot457 wrote:

@Slabenstein wrote:

When you say "recent $10k card", do you mean $10k balance or $10k limit?  Either way it won't be visible for them to include in your DTI until it reports.  Once it does, the number that will be included in your DTI will be the monthly payment as shown on your credit report.  For a $10k balance this could be quite a bit.  For a new card w/ a $10k limit, it will be the minimum payment for whatever balance posted at first reporting.

 

The Disco card w/ a $0 balance won't be included in DTI, since the minimum payment on $0 is $0.


What about if I'm an authorized user on my aunt's two cards $15,500 14%UT and $5,100 1% UT both NFCU
my NFCU card is $3k 12% UT and

self lender card $100 25%, $25 activation fee when I opened the card. 

All other cards Are zero or haven't posted yet .

 

my student loans are $9k but in deferment 


Whether AU cards will be counted will depend on the lender.  For the NFCU and Self Lender cards, they will use the minimum payment for those cards that is shown on your credit report at the time that they pull it.  You can check your ACRs yourself to see what they would be right now.  For your student loans, b/c they're in deferment how their monthly payments will be calculated will also depend on the lender, but many use 1% of your total balance.


Ok thanks my minimum payment were $25 for Self and $18 for NFCU. Also my equifax went from 703 to 708 on NFCU fico.  I applied for CLI on gorewards $3k like 20hrs ago. Still waiting 

My aunt who I have authorized user cards with told me her UTI will increase on her cards because she had an emergency and she won't be able to pay them down to her usual UTI. Her scores are in the high 700s so she won't be affected that much. Her first card is due on 4/5.

 

So I'm thinking to go ahead with the Auto loan immediately before all that settles. Although I wanted to wait until after the CLI was finished. Does NF ask for Form 4506 ?

Message 9 of 11
Slabenstein
Valued Contributor

Re: How to take the guesswork out of my Debt to income ratio?


@jdot457 wrote:

@Slabenstein wrote:

@jdot457 wrote:

@Slabenstein wrote:

When you say "recent $10k card", do you mean $10k balance or $10k limit?  Either way it won't be visible for them to include in your DTI until it reports.  Once it does, the number that will be included in your DTI will be the monthly payment as shown on your credit report.  For a $10k balance this could be quite a bit.  For a new card w/ a $10k limit, it will be the minimum payment for whatever balance posted at first reporting.

 

The Disco card w/ a $0 balance won't be included in DTI, since the minimum payment on $0 is $0.


What about if I'm an authorized user on my aunt's two cards $15,500 14%UT and $5,100 1% UT both NFCU
my NFCU card is $3k 12% UT and

self lender card $100 25%, $25 activation fee when I opened the card. 

All other cards Are zero or haven't posted yet .

 

my student loans are $9k but in deferment 


Whether AU cards will be counted will depend on the lender.  For the NFCU and Self Lender cards, they will use the minimum payment for those cards that is shown on your credit report at the time that they pull it.  You can check your ACRs yourself to see what they would be right now.  For your student loans, b/c they're in deferment how their monthly payments will be calculated will also depend on the lender, but many use 1% of your total balance.


Ok thanks my minimum payment were $25 for Self and $18 for NFCU. Also my equifax went from 703 to 708 on NFCU fico.  I applied for CLI on gorewards $3k like 20hrs ago. Still waiting 

My aunt who I have authorized user cards with told me her UTI will increase on her cards because she had an emergency and she won't be able to pay them down to her usual UTI. Her scores are in the high 700s so she won't be affected that much. Her first card is due on 4/5.

 

So I'm thinking to go ahead with the Auto loan immediately before all that settles. Although I wanted to wait until after the CLI was finished. Does NF ask for Form 4506 ?


I don't know what NFCU uses for income verification on an auto loan, though I'd expect it would be paystubs.  You can ask them before applying.  The turnaround on a 4506T would be way too long to be practical; they'd lose the loan in the wait if they hadn't already lost it to the member not wanting to give EQ access to the their taxes.


Message 10 of 11
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