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HIGH DEBT-TO-INCOME RATIO LOANS
Do you service loans in Northern California? What kind of loan can you offer which would give me the highest Debt to Income Ratio?
My income is short, however, up to 825 credit score, clean credit and steady income documentation. Have a townhome, which would have to sell and put down up to 50% on my next purchase, however, am not meeting DTI. Looking for a single family home, would be my primary home, after selling my current townhome. Need 57% to 60% DTI. Maybe FHA? Not tried that route yet.
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1 Reply
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An FHA loan may be a good choice in your condition as it allows for higher debt-to-income ratios than conventional loans. Here are some points to note:
FHA Loan DTI Limits: You can have a maximum of up to 46.9% front-end and 56.9% DTI back-end according to typical FHA guidelines (including both front-end and back-end ratios). This is very appropriate in your case because you possess high credit score points alongside a large down payment.
Compensating Factors: Your good credit scores, clean credit history, and ability to put down 50% are strong compensating factors that allow the lender to approve your loan request even with higher DTIs.
Manual Underwriting: Depending on how strict or flexible a particular lender may be regarding their standards, where an applicant’s debt-to-income ratio surpasses this limit through auto-underwriting, manual underwriting could push it over further.
Alternative Options: Other non-QM loans apart from FHA can also work. Non-loans sometimes provide more leniency around DTI ratios but usually come with higher interest rates attached to them. Bank statement loans go off monthly bank deposits with no income documentation required. Bank statement loans are for self-employed borrowers. The past 12 months of bank statement deposits are averaged, and the average is used as the qualified income.
You should discuss this matter with any mortgage lender who will review all your financial details before suggesting what they think is best for you. Gustan Cho Associates has no lender overlays, and we can push it to the maximum allowable debt-to-income ratio cap. Remember that since you’re planning on paying fifty percent upfront and currently boast stellar credit scores, finding such lenders shouldn’t be difficult—they might just accept working around higher debts/incomes anyway!