How strictly do lenders follow the debt-to-income ratios of 28/36 for a mortgage?

Question

My friends are all getting approved for monthly PITI payments that are 40-50% of their gross monthly income. They had 10-20% down payments. Do lenders care less about your debt-to-income as your down payment increases?

Answer 1

I work for a mortgage broker so I know what I am talking about.

I will depend on the lender and the loan program. Some programs don't change on DTI no matter the downpayment, others open up the more you put down. (though, keep this in mind. there is a point where the more you put down, the guidelines don't change.

In your case, if you are looking at a 28/36, pretty much, it is what it is. If you go over that, you will be in a different program. (there is still a chance of the same rate though)

Answer 2

Depends upon the lender. I work for one of the largest mortgage companies in the US. Normaly the max dti I can go on a mort is 45-50% (depends on credit grade) and have $900 disposable income for the first person and $200 for a spouse/each dependant. It is hard to believe that your friends are getting approved for payments that equal 40-50% of their gross income, i.e. they have a mort payment of $1000 and the gross income is $2000. This would be considered predatory lending.
It is possible that if their credit is really good that they got a "stated income" mortgage and their income was inflated so they could qualify.
Also, in my company LTV (loan amount divided by value) is a variable in credit grade. We do not factor in down payment in deciding dti ratio.

Answer 3

It does not particularly make experience to get pre-authorized by using different creditors, as there is not any real income. just about all of creditors will assume you to keep around, so as that they placed a good deal on the table the 1st time. it particularly is advantageous to be waiting to put in an grant that the shopper is pre-authorized, because it strengthens the grant. cost isn't the only component to evaluate, provider of the loan broking provider, transaction expenditures, last expenditures, pre-charge consequences, factors, appraisal expenditures, previous due expenditures, something that is going to cost you funds. Get the final loan equipment from the final lender you will discover. Please stay removed from internet creditors, they have no vested pastime in making particular you're happy and close on time. some internet creditors are great, do what they say they are going to do, while they say they are going to do it. Others pull a bait and turn, offering you great words up front, yet while the terrific information are available, the words exchange to a miles less alluring equipment. additionally, some creditors are lacking cut-off dates, inflicting disillusioned to the completed transaction, and a few anybody is dropping their earnest funds because of the lender not being arranged at last. Being an stated client will aid you dodge loan experience sorry approximately.

Answer 4

Erik, Just go see a Mortgage Broker.

No one can determine one thing until you take the first step. It is painless and if you get a good mortgage broker they will take you step by step on what needs to be done.

I, personally, will review your credit and other initial information and determine the best loan for you. If I see that your situation can be improved within a short period, 60 days or less, I will show you the options from that point if you have time to wait for a better loan offer.

It sounds like you are on track to buy a home. I also do real estate and you are in a "buyers market" that will remain that way for quite awhile, at least 12 to 18 months. Get your loan situation taken care of now and then start shopping.