Obtaining High Debt To Income Ratio Mortgage

Loans

Overview If a substantial amount of your monthly income is eaten up by car payments, student loans and other debt, you may find that getting financing to buy a home is difficult. Mortgage brokers can help buyers with high debt-to-income find affordable housing loans that will assist them in purchasing a home.

What Is Debt-To-Income? Your debt-to-income ratio is an important metric used by lenders to determine whether you’re a good risk for a mortgage. • Your DTI helps lenders determine how much extra

debt you can handle. • Your DTI takes into account your minimum credit

card payments, auto loan payments, student loan payments and other debt obligations.

• You’ll likely be required to provide proof of income to lenders to help calculate DTI.

• The figure is determined by dividing your monthly debts by your total monthly income.

What Banks Are Looking For?

• Banks prefer to lend money to borrowers with low DTI, as these lenders are perceived as being better risks.

• Many banks are wary of lending to borrowers

with DTI higher than 43 percent. • Some automated underwriting programs will

approve loans to borrowers with DTI somewhat higher than 43 percent.

Taking A Risk • While many lenders are loathe to make

mortgage loans to borrowers with more than 43 percent DTI, there are some who will.

• If you have good credit (740 or higher) some

banks will make loans to borrowers with up to 48 percent DTI.

• Some lenders making loans to below average

credit lenders will make loans to borrowers up to 50 percent DTI, but be prepared to pay additional costs related to these loans.

For Lenders With High DTI

If you have high DTI, a mortgage broker may be able to help. First Rate Financial Group mortgage brokers can help buyers by: • Analyzing their current financial situation to

determine what buyers’ DTI is. • Explaining buyers’ options. • Working with banks and other lenders to

find the most advantageous mortgage loans.

• Explaining the terms of these loans to buyers.

Strategies For Getting A High DTI Mortgage

There are a number of strategies buyers with high DTI can use to obtain a mortgage, including: • Making a large down payment (20 percent

or more). • Getting a co-signer. • Pay down some debt.

Government Programs Mortgage brokers have specialized

knowledge of various government programs that can help buyers with high DTI get a mortgage loan, including: • FHA loans • Veteran’s Administration Loans • Other state and federal programs

encouraging home ownership.

Reducing Your Debt One way you can help your mortgage lender help you find better deals on home loans is by reducing your debt. You can reduce debt by: • Making payments on time. • Consolidating debts to get lower

payments and rates. • Reducing your monthly spending and

dedicating more of your disposable income to quickly paying off debt.

First Rate Financial Group provides mortgage banker and brokerage services to the Conejo Valley area. Established in 1989, we seek to provide clients with superior service and expert advice on finding the best home loans and refinancing options available. Whether you’re a first-time home buyer, an investor purchasing rental property or a current homeowner seeking a refinance or reverse mortgage deal, we can help provide the professional insight you need to make an informed decision. To learn more, visit http://www.frfgp.com/.

About First Rate Financial Group