Please Critique

[Anonymous]

I need someone to help me determine if we are considered to have too much debt, or doing ok from a bank's stand point. I think we are doing ok given that we are not over our heads but I sometimes wonder if we are pushing it.

Our monthly debt and income:

Monthly income net: 7220

Auto loans: 1200

3 CC Balances total: $7000. I pay 150 on each.

Current Mortgage payment: $1000. Just sold this house.

Would we be able to afford a mortgage payment of $2600/month if the Credit Cards are all paid off?

Thanks for any sort of help.

[Anonymous]

From what I have been told you can carry a max DTI of 45% of Gross pay to get a conventional mortgage. 

[Anonymous]

No, that can't be correct. I didn't think that there was a concrete DTI lenders look at. BTW, we are seeking VA not conventional.

[tryingtogetitrightnow]

From what I've read VA actually prefers 41%. However, they can go up from there with compensating factors. Here are a couple links:

http://www.valoans.com/va_facts_debt.cfm

http://www.veteranloancenter.com/handbook/debt_income_ratio.html

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@Anonymous wrote:

No, that can't be correct. I didn't think that there was a concrete DTI lenders look at. BTW, we are seeking VA not conventional.

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[Junejer]

TA, lenders use gross income to do D/I calculations.

[BallBounces]

A couple notes:

• Your exisitng (or past) mortgage has no bearing on your future DTI calculation.
• If your CCs are paid off, they have no bearing on your DTI.
• Use your GROSS income to calculate DTI.
• YOU should decide if you can afford 2600/month, the LENDER will decide if they will grant the loan
• 1200 is a hefty monthly chunk for auto loans that will add to your back end DTI

Message Edited by VistaV on 03-19-2008 08:53 AM

[Anonymous]

Your exisitng (or past) mortgage has no bearing on your future DTI calculation.

If your CCs are paid off, they have no bearing on your DTI.

Use your GROSS income to calculate DTI.

YOU should decide if you can afford 2600/month, the LENDER will decide if they will grant the loan

1200 is a hefty monthly chunk for auto loans that will add to your back end DTI

Very true but I just threw those numbers in there because if I didn't I would get questions like: do you have other debts? etc.

I know I can afford that much in a mortgage payment only because we don't spend on things like going out to eat, etc. We also don't have children (not with car payments like we have now).

But how much is too much debt for a lender to say ok you have decent credit but we cannot lend to you because you are too deep? Is there a cap DTI?

[BallBounces]

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trashyart2000 wrote:

But how much is too much debt for a lender to say ok you have decent credit but we cannot lend to you because you are too deep? Is there a cap DTI?

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Now that is the 64K question (and I asked it in another thread yesterday).

It varies by lender and situation.  If you are at 30 front end and 40 back end DTI, I think you will be OK with most lenders

[Anonymous]

64K huh? Why so low? 

[Junejer]

Times, they are a-changing. When I first got in banking (1993), mortgage lenders were looking at 28/36 front to back. Then, the back crept up to 40%, 45%, 50%. I even heard of some lenders looking at 55% back end. Many don't even worry about PITI D/I anymore, just total D/I. They are starting to pull back towards more historical lending though.