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Does anyone have experience with asking for a DTI waiver?
When I did my prequalify, I was told my DTI would be too high to allow for a mortgage payment. However, I can document with receipts over 2 years (going on 3) of paying a much larger portion of my income for rent alone, not to mention high power bills due to living in a trailer lacking adequate insulation. I have 2 people in the trailer and the power bill runs $350-$400 month in winter. By comparison, my brother lives in a house with 4 adults, 4 kids full time & 2 part time due to shared custody and in winter his power bill only runs around $400-$500, not to mention his house is easily twice the size of my trailer. I can't even sleep in my bedroom between mid-Nov to mid-March due to the inadequate heating, my room won't get above 55 even with the heat going wide open - the living room where the furnace is located barely reaches 65.
On my prequalify, my score was a 686 which I know can be a compensating factor to request waivers. However, I can document a large portion of income used for housing expenses historically andI have been very conservative in my use of credit; both of which are listed as compensating fators for requesting a DTI waiver. A slight increase in housing expenses is also listed as a compensating factor but I would literally be able to buy a home and pay much less for a mortgage than I have been paying for rent. In addition, since I'm disabled, I qualify for a property tax exclusion of the first $25K value of a home.
I've been browsing the MLS and see homes (not trailers) under $70K that are small, under 1000 sq ft very frequently. Even using $70K as a loan amount and ignoring a payment subsidy and only using a 33 yr term, I could still pay under $300 month to buy a house.
$70,000 @ 3.25% & 33 yrs = $288.40 month
Since I am likely to see a substantial decrease in housing costs, anyone know my odds of getting a waiver? I know with inadequate heating, my application would have a higher priority processing status.
I was asking about a waiver because I was told my DTI would be too high even with no other debt. It wasn't the actual loan officer but another person in the office who said they didn't think I could find a home I could afford, even with no other debt, based upon my low income.
Good news is I pulled my actual FICO yesterday and my mortgage scores are 686, 696, 702. I just wondered if anyone had actually heard of them approving a waiver for DTI.
I suspect the issue of the waiver is going to be dependent on how much of a waiver you need. I suspect if it is a couple of percent it would be fairly easy to document the difference in utility cost but if your income is marginal compared to the mortgage payment that would be a problem. Persoanally I would talk directly with a loan officer so they can look at the entire situation and provide some advice. A morgage broker might be a good option rather than a single bank.
@Anonymous wrote:I suspect the issue of the waiver is going to be dependent on how much of a waiver you need. I suspect if it is a couple of percent it would be fairly easy to document the difference in utility cost but if your income is marginal compared to the mortgage payment that would be a problem. Persoanally I would talk directly with a loan officer so they can look at the entire situation and provide some advice. A morgage broker might be a good option rather than a single bank.
USDA Direct is the bank. They have a loan officer assigned from app. Questions go to loan specialists. A mortgage broker can not help, there are no other loans that give 1% interest. . The waiver can also be applied when there is a big reduction in rent. Op needs to pre app. They gross up non taxable income (ss, hap, etc) by 120%. Just talking with them will not help, they have to run the numbers through the computers,
I did the prequalify in Jan. I was told that with the standard DTI ratios, even with no other debt, they estimated I would only be able to afford a home around $40-$45K.
This was direct from someone within the USDA office but not the actual loan officer. It was whoever ran the prequalify.
However, I have been consistently paying $400 per month for rent alone for over 2 yrs, with no assistance. Once I was able to qualify for balanced budget utility billing, my power bill was $140 per month but it went down to $130 month for 2016 since I used less power than estimated. I was specifically interested in DTI ratio waivers because I can prove I am able to pay a large % of income towards housing and that might make it easier to find a home. The individual whom I spoke with about my prequalify seemed reluctant to send me an actual application and checklist of docs I would need to include with my app. They stated several times that it was thier opinion I would need a cosigner.
This is a very rural area and I have seen multiple homes for $70K or less. If I was able to find a home for $70K on 33 yrs & 3.25% interest = payment of $288.40 which would give me a DTI for the payment around 31-33%. I don't think they grossed up my SSI & SSDI. My self employment nt is under $50 month so I'm personally not counting it for repayment, even though I've been doing this work since 2006 with just a couple yrs break when I moved between states. I would also get a break on my property taxes due to being disabled.
I was just curious if other people had seen a waiver allowed for DTI in a situation like mine.