DTI...how is it calculated???

[Anonymous]

Hello all, I understand that DTI is a factor in FICO scoring, however, how is it calculated when figuring affordable mortgage? Is the % based on estimated mortgage payments alone or mortgage plus car note, cc, ect? Thanks

[Anonymous]

There are two DTIs for an FHA and Conventional loan. You get the top number by dividing your PITI by your gross monthly income. You get the bottom number by adding your installment and revolving debt to the PITI and dividing by your gross monthly income. It used to be, (I've been out of the mortgage biz for a while, so don't know what's changed), 29/41 for an FHA. Your PITI can't (shouldn't) be more than 29% of your monthly gross. When you add the PITI to your monthly revolving and installment debt (this doesn't include utilites, car insurance, ballet lessons, unless they're showing on your credit report), etc. - only revolving (minimum payments) and installment, (car loans, etc.) - should not exceed 41% of your monthly gross. Strong borrowers with cash in the bank can get away with a higher DTI ratio, but that's decided on a case by case and isn't super common. You don't have to include payments of installment loans that will be paid off in less than a year.

Hope this makes sense. It's late and I'm a little delirious!

[Anonymous]

Thanks so much for your help but... Idk what PITI means??! Thanks

[Anonymous]

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@Anonymous wrote:
Thanks so much for your help but... Idk what PITI means??! Thanks

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Principal + Interest + Taxes (Property Taxes i.e. school + city/municipality) + Insurance (Homeowner's)

[Anonymous]

Thank u

[StartingOver10]

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@Anonymous wrote:

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@Anonymous wrote:
Thanks so much for your help but... Idk what PITI means??! Thanks

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Principal + Interest + Taxes (Property Taxes i.e. school + city/municipality) + Insurance (Homeowner's)

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^^^^exactly right and if you purchase a condo or an HOA type proeprty, add the HOA or condo fees to the above too

[JusdoNit]

Thanks I needed that dti calculation refresher