Does it matter?

[DallasLoanGuy]

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@oracles wrote:

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@Anonymous wrote:

I will help you here though!

Usually the lender will pull your numbers (financial) and your credit scores. Based upon that, the lender will tell you what you are qualified for. You probably want to avoid PMI for the life of the loan if you can so conventional will be the better route.

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Thanks for the response

i would not have to worry about the pmi because I am putting down 20% in both situations, my concern is will they do 50% dti with a fha loan as oppose to 45% with a conventional.   fha has pmi evenwith a 90% down payment.... 

if this is accurate what is the catch? 

higher interest, higher closing cost?

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[Anonymous]

No reason not to go conventional with 20% down and great credit. If you are close to 50% backend DTI, I'd consider paying down some other debt rather than going FHA. 

[oracles]

I can't dpeezy, the only Bills I have on my report are my current mortgage $466 (condo), auto loan $398 and a credit card bill which is on a 0 percent bal transfer and I pay 60 dollars a month, with my income of 90k, I would like 50% dti to get a house I would like. In New Jersey, houses are expensive where I am looking. 400k and up

[StartingOver10]

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@oracles wrote:
I can't dpeezy, the only Bills I have on my report are my current mortgage $466 (condo), auto loan $398 and a credit card bill which is on a 0 percent bal transfer and I pay 60 dollars a month, with my income of 90k, I would like 50% dti to get a house I would like. In New Jersey, houses are expensive where I am looking. 400k and up

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^^^^So you have gross monthly income of $7500 and total debt (without the new payment) of $924 which is just about 12% DTI.  I assume you are keeping the condo and that is why you are including it in your debt ratios. If you are selling it, then you don't need to include the $466/mth payment. I also assume the $466 is the total payment. If you have condo fees on top of that, AND you are keeping the condo, those fees will be included in your debt ratio.

The car payment is almost as large as your condo payment. If you pay off the vehicle (if possible) it will free up tons of funds for you - even taking into account NJ taxes. 

What will be your new payment on the new purchase? Do you know yet?

[oracles]

You are right on with your figures and yes I am keeping my condo and subleasing it. I live in New York currently and my maintenance fee is 802 so that brings up my ratio a lot and why I am looking for 50%. I have not pre quail yet but I was just doing the math on my own. Also I would sublease but I don't know if they will take that into consideration. The sublease would be 1500 which is very cheap where I live and I am doing it just so I can get a renter quickly. That pays for my mortgage and maintenance but again, I don't know if they will take that into consideration. With houses being over 400k+, having 50% ratio would help tremendously

[oracles]

Also to add, I would refinance my mortgage, only owe 15k to get 100k and my new monthly mortgage on condo would be 561 per month which increase my dti but I will have 100k to put as a down payment.

[StartingOver10]

There are lenders that do non-conforming conventional loans with back end debt ratios over 43% and close to 50%.

Find one of those lenders. Usually you will find correspondent lenders are excellent. They originate, underwrite and fund their own loans.  

Stay away from the big box banks - they are very, very conservative (think 43%).

If you have never been a landlord before, the lender will probably not allow the rental income at all in these DTI calculations. 

If you have been a landlord and been reporting your income, then they will include the income but not dollar for dollar. When they do, they want to see more than just a 'break even'.  They will use 75% of whatever the rental income is - allowing for 25% vacancy and collection. If you have a net liability (more expense after the income) it will translate to your bottom line as a debt. If you have more income than expense for the condo rental it will be included in your income (the net rental amount).

[oracles]

Well I would have over 100 dollars of added income since mortgage and maintenance would be 1268 and I am asking for 1500, again if they take this into consideration. Also to add, I just got my auto loan a year ago so I can't pay that off. Can you give me some examples of correspondent lenders that are located in New Jersey or do I just google "correspondent lenders" to contact.

[oracles]

I have never been a landlord and now definitely I need 50% ratio lol

[StartingOver10]

Sent you a pm.

Just so you know:  if your monthly expense is $1268 and the monthly rental income (gross) is $1500, the basic calculation is $1500*.75=$1125/month (after V&C)-$1268 which is a net liability (debt) of $143.  Not a net additional income of $100.  That would be in the best case scenerio. You are also suppose to take out maintenance and repairs. But I think in your particular circumstance they won't allow any of the 'rental income' because you don't have it rented yet and haven't reported the income on your taxes (because it isn't rented yet). 

This would be a good thing to speak to each LO that you interview for your potential loan application. Find out exactly where you stand before you make application.