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USDA DTI waiver

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New Contributor

USDA DTI waiver

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.

Scores on 4/182016
Mortgage - EQ 694 EX 713 TU 706
FICO - EQ 654 EX 696 TU 691
Message 1 of 7
6 REPLIES 6
Super Contributor

Re: USDA DTI waiver

Try getting the DTI down. I payed off, and moved some, to get optimal scoring for mortgage. My mortgage score on EQ is higher than my Fico 8. Maybe an explanation of how you are paying down the debt. Plus, if the home purchased results in a much lower payment, waiver can be issued.

Call them up, and run these scenarios by them.
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Message 2 of 7
New Contributor

Re: USDA DTI waiver

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.

Scores on 4/182016
Mortgage - EQ 694 EX 713 TU 706
FICO - EQ 654 EX 696 TU 691
Message 3 of 7
Valued Contributor

Re: USDA DTI waiver

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.

Message 4 of 7
Super Contributor

Re: USDA DTI waiver


@workingfor850 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.  Smiley Wink. 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,

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Message 5 of 7
New Contributor

Re: USDA DTI waiver

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.

Scores on 4/182016
Mortgage - EQ 694 EX 713 TU 706
FICO - EQ 654 EX 696 TU 691
Message 6 of 7
Super Contributor

Re: USDA DTI waiver

Can not answer you yet, waiting for stuff to happen.
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