Gustan Cho The Mortgage Expert,
Publish On: July 15, 2022
In this blog, we will cover and discuss the 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 ratio requirements. There are two types of mortgage underwriting guidelines: Federal Minimum Mortgage Lending Guidelines set by FHA, VA, USDA, and Fannie Mae/Freddie Mac. Mortgage Lender Overlays: Overlays are additional mortgage guidelines set by individual lenders that are above and beyond Federal Mortgage Lending Guidelines. Gustan Cho Associates does not have overlays and just goes off Automated Underwriting System Findings. Every home mortgage program has its own maximum debt-to-income ratio caps.
What Are The Two Qualifying Ratios Used By Mortgage Lenders?
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, and 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 ratio is the back-end debt to income ratio. 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.
What Are The 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 For AUS Approval From DU Findings
In order to get an approved/eligible from DU Findings on loan programs are the following:
Maximum debt-to-income ratios for AUS approval on 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 ratio surpasses the 46.9% debt-to-income ratio, 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 ratio by shopping for a house with lower property tax rates
What Are The Maximum Debt-to-Income Ratio For AUS Approval on USDA Loans
The maximum debt-to-income ratio for AUS approval on USDA Loans:
- The maximum front-end debt to income ratio is 29% and the back end is 41% to get an approve/eligible per automated underwriting system (AUS) on USDA Loans
What Are The Maximum Debt-To-Income Ratios For AUS Approval on Conventional Loans
Maximum Debt-To-Income Ratios For AUS Approval on 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
What Are The Maximum Debt-To-Income Ratios For AUS Approval on VA Loans
Maximum Debt-To-Income Ratios For AUS Approval on VA Loans:
- There are 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 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.
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