Understanding How Debt-To-Income (DTI) Works When Applying For A Mortgage

What is DTI?

When applying for a Mortgage, your DTI plays a huge factor in qualifying for a mortgage. Debt-to-income (DTI) is a ratio which Loan Officers, like myself, look at to determine whether or not you are able to qualify for a mortgage. DTI is based on your monthly Debt and monthly Income.

 

There are 2 types of DTI:

 

– Front End DTI is your monthly housing expense
– Back End DTI is all your monthly debt (housing, credit card, loans, etc)

 

Each mortgage program (FHA, USDA, VA, Conventional) have different requirements when it comes to Debt-to-Income.

 

FHA for example is for those who have less-than-perfect credit and/or are first time home buyers. So compared to a Conventional Mortgage which has a lower Debt-to-Income tolerance, FHA is more lenient and allows borrowers to have a much higher Debt-to-Income (meaning more debt). This is due to the difference in the purpose of the two products. Same goes for USDA and VA loans – they both have different goals for their loan programs and thus have different Debt-to-Income requirements.

 

For a free mortgage consultation and to understand how Debt-to-Income works – please contact me any time via email, text, or phone call! Thank you and I look forward to speaking with you!

 

Ram
Ramazan Sinani
Mortgage Loan Originator
Northeast Financial
NMLS: 1590862 Company NMLS: 117273
Cell: 203-695-6858 Fax: 203-413-6240
[email protected]

 

 

 

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