high dti

[bRICrEAW]

I want to apply for a mortgage, but multiple lenders have said that my dti is too high. I have a large student loan balance that is on the income-driven plan and a new car with a 560/mo payment. I am upside down on the car. They are recommending I sell the car and have a payment of under 200/mo. I am upside-down on the car and for me to pay the amount that I am upside-down combined with replacing the vehicle is a lot of money when I have to pay for a down payment on a home too. I bought the car because the car I had required constant maintenance and was extremely expensive. It is doubtful I can find a reliable vehicle for that price in this market. Can I refinance with a smaller balance to get a lower payment and get approved? I really want a house right now as it is the perfect time for me to get one. My credit score is very high. What is the best way to deal with this situation?

[LakeLife]

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@bRICrEAW wrote:

I want to apply for a mortgage, but multiple lenders have said that my dti is too high. I have a large student loan balance that is on the income-driven plan and a new car with a 560/mo payment. I am upside down on the car. They are recommending I sell the car and have a payment of under 200/mo. I am upside-down on the car and for me to pay the amount that I am upside-down combined with replacing the vehicle is a lot of money when I have to pay for a down payment on a home too. I bought the car because the car I had required constant maintenance and was extremely expensive. It is doubtful I can find a reliable vehicle for that price in this market. Can I refinance with a smaller balance to get a lower payment and get approved? I really want a house right now as it is the perfect time for me to get one. My credit score is very high. What is the best way to deal with this situation?

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We need many more data points to help you.  Consider the following questions.

What's your very high credit score?  What's the car worth?  What's the payoff on the loan?  What's the interest rate on the loan?  What's your current DTI?  What's your monthly income?  What's the range of houses you're looking at?  How much down payment?  What are you paying monthly on your student loans?  Any other loans, credit cards?

[bRICrEAW]

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@LakeLife wrote:

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@bRICrEAW wrote:

I want to apply for a mortgage, but multiple lenders have said that my dti is too high. I have a large student loan balance that is on the income-driven plan and a new car with a 560/mo payment. I am upside down on the car. They are recommending I sell the car and have a payment of under 200/mo. I am upside-down on the car and for me to pay the amount that I am upside-down combined with replacing the vehicle is a lot of money when I have to pay for a down payment on a home too. I bought the car because the car I had required constant maintenance and was extremely expensive. It is doubtful I can find a reliable vehicle for that price in this market. Can I refinance with a smaller balance to get a lower payment and get approved? I really want a house right now as it is the perfect time for me to get one. My credit score is very high. What is the best way to deal with this situation?

---

We need many more data points to help you.  Consider the following questions.

What's your very high credit score?  What's the car worth?  What's the payoff on the loan?  What's the interest rate on the loan?  What's your current DTI?  What's your monthly income?  What's the range of houses you're looking at?  How much down payment?  What are you paying monthly on your student loans?  Any other loans, credit cards?

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Score 790, car loan 34k 4%. I could sell it for 27k. Student loans deferred payment will be 320. 10% down on ~160k. Income 4750/mo. No other debt

[VAMortgageGuy]

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Score 790, car loan 34k 4%. I could sell it for 27k. Student loans deferred payment will be 320. 10% down on ~160k. Income 4750/mo. No other debt

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What's the monthly payment on the car/term of the loan? Did the lender tell you which loan program?

[ShanetheMortgageMan]

Unless you are a veteran (who would be eligible for a VA mortgage) then with a 790 score usually conventional financing is the better type of mortgage to go with, as it should result in a lower monthly payment than your other options.  However, the conventional financing requires a lower DTI than FHA financing (50.49% max vs. 56.99% max), so have you discussed that option with your loan officer?  I ask because with your current numbers your DTI looks very likely to be within the FHA limit.

Have you explored other student loan payment options that would reduce the payment lower than $320/mo or is that the lowest student loan payment option for you?

[VAMortgageGuy]

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@VAMortgageGuy wrote:

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Score 790, car loan 34k 4%. I could sell it for 27k. Student loans deferred payment will be 320. 10% down on ~160k. Income 4750/mo. No other debt

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What's the monthly payment on the car/term of the loan? Did the lender tell you which loan program?

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@VAMortgageGuy wrote:

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Score 790, car loan 34k 4%. I could sell it for 27k. Student loans deferred payment will be 320. 10% down on ~160k. Income 4750/mo. No other debt

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What's the monthly payment on the car/term of the loan? Did the lender tell you which loan program?

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Sorry, I just realised you mentioned the car payment in your original post. Depending on where you're looking to buy, HomeReady or Home Possible could be an option. Based on the numbers you provided & rates today for a HomeReady 30 year fixed mortgage, your ratios are under 50% for a purchase price of $160,000 with 10% down. It's possible the lenders you spoke with either have an overlay or they're just unaware of the ratio limits for conventional loans.

You also have the option of buying out the PMI which reduces your monthly payment and your back end ratio.

[bRICrEAW]

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@ShanetheMortgageMan wrote:

Unless you are a veteran (who would be eligible for a VA mortgage) then with a 790 score usually conventional financing is the better type of mortgage to go with, as it should result in a lower monthly payment than your other options.  However, the conventional financing requires a lower DTI than FHA financing (50.49% max vs. 56.99% max), so have you discussed that option with your loan officer?  I ask because with your current numbers your DTI looks very likely to be within the FHA limit.

Have you explored other student loan payment options that would reduce the payment lower than $320/mo or is that the lowest student loan payment option for you?

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This is the lowest payment plan right now. I wish I could get it a bit lower.

[bRICrEAW]

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@VAMortgageGuy wrote:

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Score 790, car loan 34k 4%. I could sell it for 27k. Student loans deferred payment will be 320. 10% down on ~160k. Income 4750/mo. No other debt

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What's the monthly payment on the car/term of the loan? Did the lender tell you which loan program?

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When I asked, they said FHA. 

[bRICrEAW]

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@VAMortgageGuy wrote:

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@VAMortgageGuy wrote:

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Score 790, car loan 34k 4%. I could sell it for 27k. Student loans deferred payment will be 320. 10% down on ~160k. Income 4750/mo. No other debt

---

What's the monthly payment on the car/term of the loan? Did the lender tell you which loan program?

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@VAMortgageGuy wrote:

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Score 790, car loan 34k 4%. I could sell it for 27k. Student loans deferred payment will be 320. 10% down on ~160k. Income 4750/mo. No other debt

---

What's the monthly payment on the car/term of the loan? Did the lender tell you which loan program?

---

Sorry, I just realised you mentioned the car payment in your original post. Depending on where you're looking to buy, HomeReady or Home Possible could be an option. Based on the numbers you provided & rates today for a HomeReady 30 year fixed mortgage, your ratios are under 50% for a purchase price of $160,000 with 10% down. It's possible the lenders you spoke with either have an overlay or they're just unaware of the ratio limits for conventional loans.

You also have the option of buying out the PMI which reduces your monthly payment and your back end ratio.

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Are these difficult to be approved for? Are there any special requirements? Also, would I be able to get approved for a little more if necessary or would this be around the maximum amount due to dti?

[VAMortgageGuy]

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@bRICrEAW wrote:

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@VAMortgageGuy wrote:

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@VAMortgageGuy wrote:

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Score 790, car loan 34k 4%. I could sell it for 27k. Student loans deferred payment will be 320. 10% down on ~160k. Income 4750/mo. No other debt

---

What's the monthly payment on the car/term of the loan? Did the lender tell you which loan program?

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@VAMortgageGuy wrote:

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Score 790, car loan 34k 4%. I could sell it for 27k. Student loans deferred payment will be 320. 10% down on ~160k. Income 4750/mo. No other debt

---

What's the monthly payment on the car/term of the loan? Did the lender tell you which loan program?

---

Sorry, I just realised you mentioned the car payment in your original post. Depending on where you're looking to buy, HomeReady or Home Possible could be an option. Based on the numbers you provided & rates today for a HomeReady 30 year fixed mortgage, your ratios are under 50% for a purchase price of $160,000 with 10% down. It's possible the lenders you spoke with either have an overlay or they're just unaware of the ratio limits for conventional loans.

You also have the option of buying out the PMI which reduces your monthly payment and your back end ratio.

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Are these difficult to be approved for? Are there any special requirements? Also, would I be able to get approved for a little more if necessary or would this be around the maximum amount due to dti?

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With a 790 score, it shouldn't be an issue. They do have income limits based on AMI of the area you want to buy in.

It may be possible to go a little higher depending on how much the taxes & home owners insurance are and whether or not there are HOA dues.

I'm surprised the other lenders capped your DTI so low on an FHA loan.