Maximum Debt To Income Ratios For AUS Approval

This Article Is About Maximum Debt To income Ratios For AUS Approval

One of the key factors in getting an automated DU approval via Fannie Mae’s Automated Approval System is debt to income ratios requirements. There are two types of mortgage underwriting guidelines:

  1. Federal Minimum Mortgage Lending Guidelines set by FHA, VA, USDA, Fannie Mae/Freddie Mac
  2. Mortgage Lender Overlays: Overlays are additional mortgage guidelines set by individual lenders that are above and beyond of Federal Mortgage Lending Guidelines
  3. Gustan Cho Associates does not have overlays and just go off Automated Underwriting System Findings
  4. Every home mortgage program has its own maximum debt to income ratio caps

Maximum Debt To income Ratios For AUS Approval: Two Types Of DTI

Maximum Debt To Income Ratio Requirements

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 to 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.

Back End Debt To Income Ratios

The back end debt to income ratios include monthly minimum credit card payments, monthly minimum automobile payments, student loan payments, alimony payments, child support payments, and any other minimum required minimum monthly credit payments that are 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

The back end debt to income ratios includes the proposed new home mortgage as well.

Maximum Debt To Income Ratios To Get An Approved/Eligible From DU Findings

How to get maximum debt-to-income ratios for approval / eligibility based on DU performance

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  to get an approve/eligible per automated underwriting system is f 46.9%  front end and 56.9% back end
  • 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 than 46.9% is to have a lower mortgage loan amount or a lower mortgage rate
  • Another solution is getting a lower front end debt to income ratios is by shopping for a house with lower property tax rates

USDA Loans:

  • The maximum front end debt to income ratio is 29% and back end is 41% to get an approve/eligible per automated underwriting system (AUS) on USDA Loans

Conventional Loans:

  • There is no maximum front end debt to income ratios on conventional loans
  • The maximum debt to income ratio allowed on conventional loans is 50% to get an approve/eligible per automated underwriting system

VA Loans:

  • There is no maximum debt to income ratio caps on VA loans as long as the borrower can get an approve/eligible per automated underwriting system

Borrowers who need to qualify without mortgage lender overlays can contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at [email protected] The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.

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