What debts are counted for DTI?

[Jazzzy]

Am I correct that to figure out how much mortgage you can afford that you must calculate DTI?

What exactly is counted in DTI?

New mortgage payment + taxes + insurance?

Car payments?

Credit card payments?

Student loan payments?

What am I missing?

[edcampbell613]

Anything that will populate on your credit report.

All you have listed

+ alimony or child support

+ HOA dues

I have even seen some lenders go through your checking account statements and add other things such as;

+ Storage locker rentals

+ Boat marina monthly fees

anyone else chime in? This is just off the top of my head.

[ShanetheMortgageMan]

Correct, debt to income ratio determines how much you can qualify for.

Mortgage (includes taxes/insurance/HOA), installment, leases, revolving, child support and alimony.

401k loans, union dues & child care expenses aren't included in the debt ratio.

[Jazzzy]

Thanks Shane & Ed...one more question...

We have 2 rental properties...I believe at the end of the year we show a small loss on these. Am I to assume that loss would be calculated into this ratio?

[edcampbell613]

Correct,

PLUS they usually only count 75% of the rental income.

[ShanetheMortgageMan]

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@Jazzzy wrote:

Thanks Shane & Ed...one more question...

We have 2 rental properties...I believe at the end of the year we show a small loss on these. Am I to assume that loss would be calculated into this ratio?

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Assuming these are reported on Schedule E, you will add back in insurance, mortgage interest, property taxes & depreciation/depletion.  Depreciation/depletion because it's not an actual cash expense, and interest/taxes/insurance because on the schedule of real estate owned on the loan application the current amount for those items will be accounted for (so you don't get hit twice).  Rental income will be taken from line #3 divided by fair rental days, but won't be any more than the current amount you are renting it out for.

If they aren't on your tax returns then like Ed said, take 75% of the gross rental income to qualify (higher % if you are doing FHA financing).

[Jazzzy]

Just had a thought....I pay a $1,200 life insurance premium each month. Will that count as a debt to be considered in the ratio?

[Jazzzy]

I just had another thought...(I need to quit thinking!)...

We pay $1,300 medical insurance each month...does that count as a debt in the DTI ratio?

[ShanetheMortgageMan]

Nope, neither are included in the DTI.