Maximum Debt To income Ratios For AUS Approval
This BLOG On Maximum Debt To income Ratios For AUS Approval Was UPDATED On October 29th, 2017
- Federal Minimum Mortgage Lending Guidelines set by FHA, VA, USDA, Fannie Mae/Freddie Mac
- Mortgage Lender Overlays: Overlays are additional mortgage guidelines set by individual lenders that are above and beyond of Federal Mortgage Lending Guidelines
- The Gustan Cho Team at USA Mortgage does not have lender overlays and just go off Automated Underwriting System Findings
Maximum Debt To income Ratios For AUS Approval: Two Types Of DTI
There are two different types of debt to income ratios:
- The first is the front end debt to income ratios
- Front End Debt To Income Ratios is the total sum of the principal, interest, insurance, mortgage insurance premium, property taxes, homeowners association divided by the borrower or borrowers total monthly gross income.
- Front End DTI is also referred as the housing DTI.
- The second debt to income ratios is the back end debt to income ratios.
- The back end DTI is the total monthly housing expenses(minimum monthly credit card payments, car payments, student loan payments, installment & revolving minimum monthly payments), including the housing expenses, divided by the total monthly gross income by the borrower or borrowers.
The back end debt to income ratios include monthly minimum credit card payments, monthly minimum minimum automobile payments, student loan payments, alimony payments, child support payments, and any other minimum required minimum monthly credit payments that is reflected on the credit reports.
- Utility payments, cell phone payments, cable television payments, and cable payments are not calculated in computing debt to income ratios.
Maximum Debt To Income Ratios To Get An Approved/Eligible From DU Findings
In order to get an approved/eligible from DU Findings on loan programs are the following:
- FHA Loans: the maximum debt to income ratios required for the front end debt to income ratios is 46.9% and the maximum back end debt to income ratios required is 56.9% on FHA Loans.
- A mortgage loan borrower can have 50% back end debt to income ratios and qualify for the the back end debt to income ratios per DU AUS on Conventional loans.
- On FHA Loans, the maximum back end cap is 56.9% DTI.
- However, if the front end debt to income ratios surpass the 46.9% debt to income ratios, they will not get an automated approval via DU AUS on FHA Loans.
- The only way to get an automated Fannie Mae Automated Underwriting Approval if the front end debt to income ratios are higher that 46.9% is to have a lower mortgage loan amount or a lower mortgage rate.
- Another solution in getting a lower front end debt to income ratios is by shopping for a house with lower property tax rates.
Borrowers who need to qualify without mortgage lender overlays can contact The Gustan Cho Team at USA Mortgage at 262-716-8151 or email us at email@example.com. We are available 7 days a week, evenings, weekends, and holidays.
Gustan Cho NMLS ID # 873293