DTI QUESTION .. LENDERS PLEASE HELP!

[Anonymous]

IM CURIOUS AS TO WHAT IS ALL INCLUDED INTO FIGURING DTI RATIO FOR A FHA LOAN. I KNOW FROM WHAT IVE READ ITS TYPICALLY ANYTHING THAT IS ON YOUR CREDIT REPORT. 

MY QUESTION IS MY PARENTS GOT A PRIVATE STUDENT LOAN THROUGH THEIR BANK FOR ME THAT I PAY THE PAYMENTS ON ($140 A MONTH)

ALSO WHEN I WAS IN SCHOOL THEY GOT  CAR LOAN THAT I ALSO PAY ($360) WE NEVER PUT THE LOAN INTO MY NAME.

NEITHER OF THESE HAVE MY NAME ATTACHED TO THEM AT ALL. WILL THIS BE FIGURED INTO MY DTI RATIO??? 

THANKS 

[StartingOver10]

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@Anonymous wrote:

IM CURIOUS AS TO WHAT IS ALL INCLUDED INTO FIGURING DTI RATIO FOR A FHA LOAN. I KNOW FROM WHAT IVE READ ITS TYPICALLY ANYTHING THAT IS ON YOUR CREDIT REPORT. 

MY QUESTION IS MY PARENTS GOT A PRIVATE STUDENT LOAN THROUGH THEIR BANK FOR ME THAT I PAY THE PAYMENTS ON ($140 A MONTH)

ALSO WHEN I WAS IN SCHOOL THEY GOT  CAR LOAN THAT I ALSO PAY ($360) WE NEVER PUT THE LOAN INTO MY NAME.

NEITHER OF THESE HAVE MY NAME ATTACHED TO THEM AT ALL. WILL THIS BE FIGURED INTO MY DTI RATIO??? 

THANKS 

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Yes, that debt will be included.  It is not just the debt on your credit reports.  You are required to report all of your debt on the mortgage application.  Here is a copy of the 1003 so you can read what you need.  https://www.fanniemae.com/content/guide_form/1003rev.pdf

Do not leave off any of your debt.  It is considered mortgage fraud if you do not disclose debt that you have that doesn't show up on your CR. 

[ShanetheMortgageMan]

This can be a tough area to determine, because underwriting guidelines don't specifically go over this example.  In my experience, if you aren't obligated to make the payments then they aren't included in the DTI, as they are considered voluntary deductions (just like voluntary child support payments). 

Underwriters are more careful than ever these days, so if they see payments coming out of a bank account to a creditor that isn't on your credit report, they will likely ask you to explain in an LOE what that payment is for, and if it's a debt, proof that it is/isn't your debt (a common condition from underwriting is "Provide documentation of borrower's debt or that borrower is not obligated"). 

So if you aren't on the student loan or car loan paperwork with the creditor and you didn't sign a loan agreement with your parents to pay them each month, then they aren't included in the DTI.  If you are on the car/student loan paperwork or you have a written agreement with your parents that you are to pay them (or the creditor directly), then they will be included in the DTI.

[Anonymous]

thank you ! this makes a huge difference in my DTI. 

i will see what my specfic lender says about the situation 

[Anonymous]

Question - if it makes a huge difference in your DTI, does it push you into uncomfortable financial territory, even if an underwriter allows it? 

I am totally not being judgemental in any way, just something to consider as you move forward, and as you consider the price of the homes you are looking it. An example of this is my mother - she was gifted a rental property by my grandmother. At first she was staying in the gifted house. The property is still in my grandmothers name, but my mother collects the rent and pays the taxes on it, as well as maintains it. She bought a home and either A. it was allowed by the UW, or B. she didn't disclose.

Fast forward a couple months later, her new renter started late paying and paying short. The property taxes went up because it was now a rental. She fell behind on her mortgage, because she couldn't juggle it all, and she couldn't let this impact my grandmother. She has now been in forclosure and modified her loan 6 times in the last 9 years. She also somehow obtained a 2nd mortgage along the way, and is in even deeper. She can't afford to perform basic repairs on her home, so she can't sell. She can't afford internet at home, nor TV, and now her credit score is shot so her dying car can not be replaced. To top it all off, there are protected trees on her property that are causing her sidewalk to buckle, so she is having to pay the city to replace that portion of sidewalk or face penalties.

I am sure she never saw this coming, or knew that it could turn out this way. Don't ride a thin line. I am sure my mother's story is one of a million stories, all the same.

[Anonymous]

no not at all. truthfully i am a firefighter/paramedic and make around 50k ( still in 2nd year of probie) ill be up to full pay which is 65 this coming year. plus i have a second job that pays extremely well. the only problem is they will not take my second job into account because i have only been there 6 months. so im not so much worried about being financially strapped. my dti with everything included would be around 35%. 

thanks for everyones input

[ShanetheMortgageMan]

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@Anonymous wrote:

no not at all. truthfully i am a firefighter/paramedic and make around 50k ( still in 2nd year of probie) ill be up to full pay which is 65 this coming year. plus i have a second job that pays extremely well. the only problem is they will not take my second job into account because i have only been there 6 months. so im not so much worried about being financially strapped. my dti with everything included would be around 35%. 

thanks for everyones input

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The 2nd job's income will also be used as a compensating factor in your favor when it comes time to underwrite the loan, which the underwriter can use to justify a debt to income ratio on the higher end.