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Gustan Cho Associates
The debt-to-income ratio mortgage calculator powered by Alex Carlucci of Gustan Cho Associates has been designed for users to compute their own DTI in seconds. Gustan Cho Associates created the debt-to-income ratio mortgage calculator after noticing there is no other debt-to-income ratio mortgage calculator out there that gives you the most accurate data. Every mortgage loan program has its own front-end and back-end debt-to-income ratio guidelines. Borrowers need to realize that debt-to-income ratios can greatly be affected by how much the property taxes for the same dollar amount home.
How Property Taxes Affect DTI For Mortgage
Property taxes can vary widely not just from state to state but also from county to county, and town to town. In this guide, we will go over the minimum debt-to-income ratio guidelines of FHA loans, VA loans, USDA loans, and Conventional mortgages. All mortgage lenders need to make sure their borrowers meet the minimum agency DTI guidelines. However, lenders can have their own lending guidelines on debt-to-income ratios called lender overlays. We will talk more about lender overlays later in this guide.
Do All Lenders Have The Same DTI Requirements?
Individual lenders do not have the same mortgage guidelines on the same home loan programs. A borrower may not qualify for an FHA and/or a VA loan with one lender but may qualify at a different lender. Lenders can have higher debt-to-income ratio requirements that are higher than the minimum FHA, VA, USDA, Fannie Mae, and Freddie Mac DTI requirements.
Not All Lenders Have the Same DTI Requirements on the Same Mortgage Program
Just because you cannot qualify for a home mortgage with one lender, it does not mean you cannot qualify with a different lender. It is very important for homebuyers with bad credit to understand and know the basic agency mortgage guidelines on the type of home loan program. By knowing the basic agency guidelines, you will know whether or not you get denied for a mortgage because you do not meet the agency guidelines or because of the lender overlays of the mortgage company.
What Is An Acceptable DTI For A Mortgage?
As long as you meet the minimum agency guidelines, of FHA, VA, USDA, Fannie Mae, and/or Freddie Mac you will qualify for a mortgage. Lenders can have higher lending requirements above and beyond the minimum agency mortgage guidelines. The higher lending requirements by lenders are called lender overlays on debt-to-income ratios.
How To Get a Home Loan With High Debt-To-Income Ratio?
If your lender has lender overlays on debt-to-income ratios, ask your loan officer what the maximum debt-to-income ratio is. Once you know your lender’s DTI ratio overlay, you can calculate the DTI yourself when shopping for a home. There is no need to keep contacting your loan officer whenever there is a change in numbers while shopping for a home.
In this guide on the best debt-to-income ratio mortgage calculator powered by Alex Carlucci of Gustan Cho Associates, we will cover the debt-to-income ratio requirements on government, conventional, jumbo, and non-prime mortgages. The higher the debt-to-income ratio, the higher the layered risk level for lenders.
Compute Your DTI Using Debt-To-Income Ratio Mortgage Calculator
Using the debt-to-income ratio mortgage calculator, you can get the exact front-end and back-end DTI as the mortgage underwriter. Sometimes it is very convenient for you to calculate the DTI yourself when you are shopping for multiple homes to check if you still qualify for a home mortgage than contacting your loan officer. You may be shopping for over a dozen homes with very different property tax numbers. This can affect your debt-to-income ratio.
The Best Mortgage Lenders For High DTI Borrowers
The debt-to-income ratio mortgage calculator will come in very handy for borrowers with high DTI. In the following paragraphs, we will go over every loan program’s debt-to-income ratio agency mortgage guidelines. If you are a homebuyer with a high debt-to-income ratio, we highly suggest asking your loan officer about the debt-to-income ratio overlays of his mortgage company. Gustan Cho Associates has zero lender overlays on government and conventional loans.
Compute Your Front-End and Back-End DTI in Seconds Using DTI Mortgage Calculator
The debt-to-income ratio mortgage calculator at Gustan Cho Associates has been custom designed to get the most accurate front-end and a back-end DTI used by mortgage underwriters. There is no other DTI mortgage calculator in the nation that compares to the debt-to-income ratio mortgage calculator powered by Gustan Cho Associates. Every mortgage loan program has its own debt-to-income ratio requirements,
Compute How Much Home Can You Can Afford With Property Taxes Using DTI Mortgage Calculator
Many homebuyers focus believe how much home they qualify for is based on the price of the home. This is not true. The price of the home will get you the principal and interest portion of the housing payment. This is what most online mortgage calculators give users of their calculators. Later in this guide, we will show you step-by-step instructions in computing your front-end and back-end DTI using the debt-to-income ratio using the debt-to-income ratio mortgage calculator.
Debt-To-Income Ratio To Buy a House
One of the most frequently asked questions at Gustan Cho Associates from our clients is what is the requirements of the debt-to-income ratio to buy a house. The answer to this question is it depends on the particular loan program you choose. Every loan program has its own debt-to-income ratio to buy house requirements. We will go over the debt-to-income ratio to buy a house on FHA, VA, USDA, and conventional loans. There are two types of debt-to-income ratio guidelines.
Understanding Agency DTI Guidelines Versus Overlays By Lenders
The first type is the agency mortgage DTI guidelines from FHA, VA, USDA, Fannie Mae, and Freddie Mac. The second type of DTI guidelines is the lender’s own DTI requirements called lender overlays. Gustan Cho Associates does not have any lender overlays on FHA, VA, USDA, and conventional loans. We just go off the minimum agency guidelines of FHA, VA, USDA, Fannie Mae, and Freddie Mac. Jumbo loans and non-QM mortgages are non-conforming loans and do not have a uniform debt-to-income ratio agency requirement. Each Jumbo mortgage lender and non-QM lender sets its own DTI requirements on its loan program.
DTI Home Loan Calculator
The debt-to-income ratio mortgage calculator powered by Gustan Cho Associates will give you the most accurate debt-to-income ratio based on the most accurate housing payment. Our best mortgage calculator will give you the PITI, PMI and/or MIP, and HOA. All of these components play a key part in the final housing payment to calculate your front-end and back-end debt-to-income ratio.
FHA, VA, USDA, Fannie Mae, and Freddie Mac DTI Mortgage Guidelines
Each individual loan program has its own front-end and back-end debt-to-income ratio requirements. We have created and developed a user-friendly mortgage calculator to calculate your monthly housing payment which includes PITI, PMI, MIP, and HOA on FHA, VA, USDA, and conventional loans as well as your front-end and back-end debt-to-income ratio. In the next paragraph, we will cover the minimum agency mortgage guidelines on debt-to-income ratio caps.
Getting Approved With Lender After Denied For High DTI
The best mortgage lenders for high debt-to-income ratios are mortgage brokers with a network of wholesale lenders with no lender overlays. Mortgage brokers have licensed loan officers with access to wholesale specialty niche market financial institutions. Gustan Cho Associates are mortgage brokers licensed in 48 states (not licensed in NY, MA) with over 170 wholesale lending partners. Over 75% of our clients are borrowers who could not qualify elsewhere but we qualify them and close their loans.
Mortgage Options For High-DTI Homebuyers
Gustan Cho Associates has a no-lender overlays business platform. Government and conventional loans have a set maximum DTI cap on their mortgage loan program. Mortgage lenders usually have lower debt-to-income ratio requirements than the agency DTI requirements. The lower the debt-to-income ratio, the better. Low DTI means the borrower has low monthly debts compared to his income. In the following paragraphs, we will cover and discuss the agency debt-to-income ratio guidelines.
USEFUL LINK: Mortgage Agency Guidelines Versus Lender Overlays
HUD DTI Guidelines on FHA Loans
HUD, the parent of FHA, sets the guidelines for FHA loans. FHA loans are the most popular home loan programs for homebuyers with higher debt-to-income ratios. FHA loans have several tiers on debt-to-income ratio requirements. We will go over each tier on what the maximum cap on front-end and back-end debt-to-income ratio limits on FHA loans.
How To Get Approved For Mortgage With High DTI
To get approve/eligible per the automated underwriting system (AUS), the borrower needs to have been timely in the past 12 months. Borrowers who cannot get an AUS approval and get a refer/eligible per AUS findings may be eligible for manual underwriting. Manual underwriting requires borrowers to have been timely on all payments for the past 24 months. Verification of rent is required on manual underwriting. We will cover the debt-to-income ratio manual underwriting guidelines in the following paragraphs.
FHA DTI Guidelines on 580 FICO Borrowers
FHA loans have different front-end and back-end debt-to-income ratio caps based on the borrower’s credit scores, and whether the file is manual underwriting or an automated underwriting system approved file. Borrowers with a 580 FICO and higher can get an approve/eligible per automated underwriting system on FHA loans with a 46.9% front-end and 56.9% back-end debt-to-income ratio.
FHA DTI Guidelines For Borrowers With 500 to 579 FICO
For borrowers with credit scores below 580 FICO and down to 500 credit scores, the maximum front-end debt-to-income ratio is 31% front-end and 43% back-end debt-to-income ratios. This is with approve/eligible per the automated underwriting system (AUS). The above only holds true if the borrower has an AUS- approval.
How To Get AUS Approval With Bad Credit?
The key to getting an automated findings approval, the borrower needs to be timely on all their payments in the past 12 months. If the borrower can’t get an automated findings approval and get a refer/eligible per AUS approval, the borrower may be eligible for a manual underwrite. You can use the debt-to-income ratio mortgage calculator to compute the front-end and back-end DTI on FHA loans in a matter of seconds.
FHA DTI Guidelines on Manual Underwriting
If a borrower cannot get approve/eligible per the automated underwriting system, and get a refer/eligible AUS findings, the borrower may be eligible for manual underwriting on FHA loans. The only major difference between automated and manual underwriting is the lower debt-to-income ratio requirements on manual underwrites.
Compensating Factors For Borrowers With High Debt-To-Income Factors
The maximum front-end and back-end DTI requirements with no compensating factors are 31%/43%. The maximum front-end debt-to-income ratio is 37% and the back-end is 47% DTI with one compensating factor. With two compensating factors, the maximum front-end DTI is 40% and the back-end DTI is 50% DTI. Compensating factors are positive factors that reduce the risk for the lender. Since compensating factors lowers layered risk for the lender under the eyes of the lender, they can increase the debt-to-income ratio cap on manual underwrites.
What To Do After Denied For A VA Loan Due To High DTI?
Most first-time homebuyers believe all mortgage lenders have the same lending requirements on VA loans since they are government-backed loans. This is not true. All lenders must make sure their borrowers meet the minimum agency guidelines of the VA. However, lenders can have higher requirements for VA loans. VA loans have one of the most lenient mortgage guidelines of any other home loan program. The VA created VA loans to reward our servicemen and servicewomen for their service.
Why Do Borrowers Get Denied For a Mortgage After Being Pre-Approved?
The main reason why borrowers get denied after they have been pre-approved is that the loan officer did not properly qualify borrowers. For example, a borrower with a 550 got an approve/eligible per automated underwriting system (AUS) approval and meets the VA agency guidelines. However, through the mortgage process, the mortgage underwriter catches the 550 FICO and denies the loan because the lender has a 620 FICO requirement. The loan officer should have known the overlays of his employer. The borrower will qualify for a VA loan with a lender with no lender overlays on credit scores. Mortgage lenders can have lender overlays on everything.
VA Loans With Poor Credit
Homebuyers can get approved for VA loans with poor credit. As long as you have been timely in the past 12 months, you can qualify for a VA loan with unpaid collections, charge-offs, late payments, and other derogatory credit tradelines. Check to see the reason why you got denied. There are lenders that deny borrowers even with an approve/eligible per automated underwriting system (AUS) approval because the lender has overlays. Many times, borrowers with an approve/eligible get downgraded to a manual underwrite because of poor credit.
What Happens If I Got Denied For a VA Loan After Being AUS Approved?
If you got approve/eligible per AUS but got denied due to overlays, you are all set to get loan approval with a lender with no overlays. If you did not get an AUS approval, did you get a refer/eligible? With refer/eligible findings, you are eligible for manual underwriting. Do you qualify for a manual underwrite? Have you been timely with all of your payments for the past 24 months? Instead of applying to every lender you talk to, do a self-evaluation and qualification. We will show you how to do this in this guide.
Getting Pre-Approved For a VA Loan After Getting Denied
Data suggests veterans have lower credit scores and credit profiles than their civilian counterparts. This is mainly because members of the military get transferred from one base to another or get deployed overseas. However, data suggest the default rate on VA loans is substantially lower than the defaults of civilians.
Steps For Mortgage Approval After Getting Denied By Lender
If you get denied a VA loan from one lender, you may qualify with a different lender. As long as you meet the minimum VA guidelines and have been timely in the past 12 months and can get an approve/eligible per the automated underwriting system, there is no reason why you should get denied for a VA loan. In the next paragraph, we will cover and discuss a case scenario on VA lenders with overlays on debt-to-income ratios.
What Is An Acceptable DTI For a Mortgage Approval For Lenders?
Let’s go over a case scenario on what an acceptable debt-to-income ratio for mortgage approval for lenders is. The VA has no maximum debt-to-income ratio cap on VA loans. However, many homebuyers with high DTI are getting turned down by all of these lenders. Many of these lenders have names starting with VA and claim that VA loans are all they do. Then why are they turning down borrowers who have an approve/eligible per the automated underwriting system?
VA Credit Score Requirements on VA Home Loans
Why are they mandating a 31% front-end and 43% back-end DTI when VA does not have a debt-to-income ratio cap? Lenders who have minimum DTI requirements are lenders who have overlays on VA loans. Let’s say Borrower A is a borrower who got an approve/eligible per AUS on a VA loan with a 550 credit score and 64% DTI. Gustan Cho Associates has no lender overlays and can qualify and approve Borrower A for a VA loan.
USEFUL LINK: VA Lender Overlays
VA Loan DTI Guidelines
Gustan Cho Associates has no lender overlays on VA loans. What this means is as long as the borrower meets the minimum VA guidelines and gets automated approval per AUS, the borrower is solid. We only go off the automated findings of the automated underwriting system and have zero lender overlays on VA loans. The Department of Veterans Affairs has no maximum debt-to-income ratio on VA loans. Gustan Cho Associates has done countless VA loans with over 60% DTI approve/eligible borrowers.
Can I Get Approved For VA Loans With High DTI?
As long as borrowers have strong residual income and have not been late in the past 12 months, you should get an AUS approval on VA loans. In cases where the borrower cannot get an AUS approval but get a refer/eligible per AUS, the borrower may be eligible for manual underwriting. The main difference between automated and manual underwriting is the debt-to-income ratio is lower in manual underwrites. We will discuss the debt-to-income ratio requirements on VA loans in the next paragraph.
VA Loan DTI Manual Underwriting Guidelines
If the borrower does not get an AUS approval and gets a refer/eligible per AUS, Gustan Cho Associates will see if the borrower qualifies for VA manual underwriting guidelines. We will discuss the basic VA DTI guidelines on VA AUS Approvals versus Manual Underwriting. The Department of Veterans Administration (VA), the federal agency that administers VA agency guidelines and the VA loan program, which has no maximum VA maximum debt-to-income ratio cap. However, most lenders will require a debt-to-income ratio not to exceed 41% to 45%. Why does this happen? Why will a lender not qualify borrowers? It is because the lender has overlays on VA loans.
VA DTI Guidelines on Manual Underwriting Versus AUS Approved Borrowers
As mentioned earlier, the VA does not have a maximum DTI cap on AUS-approved borrowers. Manual underwriting does have debt-to-income ratio caps. The debt-to-income ratio depends on the number of compensating factors. The maximum debt-to-income ratio with zero compensating factors is 31% front-end and 43% back-end DTI.
Maximum Debt To Income Ratio on Manual Underwrites
The maximum debt-to-income ratio with one compensating factor is 37% front-end and 47% back-end DTI. The maximum debt-to-income ratio with two compensating factors is 40% front-end and 50% back-end DTI. You can use the debt-to-income ratio mortgage calculator to compute the front-end and back-end debt-to-income ratio on VA manual underwrites.
USEFUL LINK: VA DTI Manual Underwriting Guidelines
USDA DTI Guidelines on USDA Home Loans
USDA loans is a very popular mortgage loan program for homebuyers looking to purchase a home in rural America. Only designated areas by the USDA Rural Development are eligible for USDA loans. Great features about USDA home loans is homebuyers can get 100% financing at competitive rates. One of the frequently asked question we get at Gustan Cho Associates is what is the maximum debt-to-income ratio for a USDA loan?
USDA maximum front-end debt-to-income ratio is 29% and maximum debt-to-income ratio is capped at 41% DTI. Borrowers of USDA loans can compute their front-end and back-end debt-to-income ratio using the debt-to-income ratio mortgage calculator powered by Alex Carlucci of Gustan Cho Associates
Conventional Loan Debt-To-Income Ratio Guidelines
Conventional loans are the most popular home loan program in the United States. The maximum debt-to-income ratio on conventional loans is 45% to 50% DTI. You can get approve/eligible for conventional loans with a debt-to-income ratio of up to 50% DTI. The problem that comes up with someone who gets an approve/eligible with a 50% DTI is if the borrower has credit scores under 680 FICO, there is no private mortgage insurance company that will insure the borrower.
Private mortgage insurance companies only want to insure borrowers with at least 680 credit scores and higher. There is no private mortgage insurance requirement on conventional loans with a 20% down payment and/or 80% or lower loan-to-value. There is no front-end debt-to-ratio requirement on conventional loans. Conventional loans only have a back-end debt-to-income ratio requirement.
High DTI Mortgage Lenders
Again, if you meet the minimum agency guidelines of FHA, VA, USDA, Fannie Mae, and Freddie Mac and get approve/eligible per the automated underwriting system (AUS), you are eligible and qualified. If a lender denies you after you get an automated underwriting system approval, it is because the lender has overlays and you can go to a lender with no overlays.
A lender with no lender overlays that just go off agency guidelines will have no problem getting you approved and closed. However, lenders can have higher lending guidelines and you may not qualify with a particular lender. Gustan Cho Associates has no lender overlays on government and conventional loans. We will cover and discuss lender overlays in the following paragraph.
USEFUL LINK: VA Loans With High DTI
Debt-to-Income Ratio Overlays By Mortgage Lenders
The debt-to-income ratio mortgage calculator powered by Gustan Cho Associates is a powerful tool for borrowers. Debt-to-income ratio is one of the most important factors for borrowers to understand prior to applying for a mortgage. The debt-to-income ratio mortgage calculator allows you to calculate how much your monthly debt payments are, including your proposed new mortgage payment, divided by your monthly gross income.
How Do Lenders Calculate Qualified Income For Mortgage?
The key to why many people feel they qualify but do not is that lenders can only use qualified income. Qualified income is not as easy as computing the salary-to-mortgage ratio. Qualified verified income is the salary minus the deduction. The qualified income that lenders can use is income that has been verified via verification of employment with the borrower’s human resources department.
Other income that can be used are part-time income, bonus income, income from a second job, and other types of income if and only if the borrower had a two-year history of making such income and the income is likely to continue for the next three years.
How To Use The DTI Mortgage Calculator
Created and launched by Gustan Cho Associates, after months of research and development, the debt-to-income ratio mortgage calculator along with the Best Mortgage Calculator powered by Alex Carlucci, are hands down the two best calculators for everyone to use and navigate to get accurate numbers. The Best Mortgage Calculator and the Debt-to-Income Ratio Mortgage Calculator are the two most powerful mortgage tools for homebuyers and loan officers during a mortgage transaction. The Best Mortgage Calculator and debt-to-income ratio mortgage calculators are the nation’s most accurate user-friendly mortgage calculators used by loan officers, and mortgage borrowers.
Steps To Using The Best Mortgage Calculator For PITI, PMI, HOA
The debt-to-income ratio mortgage calculator is user-friendly and the nation’s most accurate online mortgage calculator. Here is the step-by-step instructions on how to use the debt-to-income ratio mortgage calculator powered by Gustan Cho Associates:
- The first step to computing your front-end and back-end debt-to-income ratio is to calculate your housing payment (PITI, MIP, PMI, HOA)
- Enter the loan program you are applying for (FHA, VA, Conventional Loans, JUMBO/NON-QM Mortgages)
- For USDA loans, click the Jumbo/Non-QM for USDA loans
- The PMI and MIP will be automatically populated per the home loan program you choose: You can manually populate a different number.
- Enter the purchase price on the box that says HOME PURCHASE/VALUE.
- Enter the down payment you are going to make on your home purchase
- Enter the interest rate
- On TERM, the 30-year fixed-rate mortgage term is populated but you can manually change it to 5, 10, 15, 20, or 25 years)
You will now get the principal and interest payment of your home mortgage. Let’s continue to the next steps to get your total monthly housing payment.
- Enter the Property Tax of the subject property
- Then enter the homeowners’ insurance
- Enter HOA dues if applicable
You will get the total monthly housing payment. You will also get a breakdown of the principal and interest portion number, the PMI, and the homeowners’ insurance/HOA dues/other. Now since you have the total monthly housing payment we can continue to the debt-to-income ratio mortgage calculator.
Steps To Using The Debt-To-Income Ratio Mortgage Calculator
Once you have calculated the total housing payment, you are ready to calculate the front-end and back-end debt-to-income ratio. The total housing monthly payment is already calculated. Total the sum of all of your minimum debts. On credit cards and revolving credit accounts, just add all the minimum monthly payments due. Only total the monthly minimum payments on credit tradelines that report to the three credit bureaus such as mortgage payments, auto, student loans, installment loans, and revolving accounts.
Non-traditional credit tradelines such as utility bills, car insurance, medical insurance, cable, internet, medical, and other non-traditional tradelines that do not report on the credit bureaus are not counted for debt-to-income ratio calculations. You can now use the debt-to-income ratio mortgage calculator to calculate the front-end and back-end DTI for FHA, VA, USDA, Conventional, Non-QM, and Jumbo Mortgages.