Financing in 20774>Question Details

Drogers, Home Buyer in Bowie, MD

FHA Loan with high DTI Ratio around 50%?

Asked by Drogers, Bowie, MD Sat Jan 15, 2011

Hello, any lenders out there who can do a loan with a DTI of around 50%? I am a current home owner and would like to purchase another house to use as my personal residence. I would try to sell my current home or possibly rent it out, but I need to qualify for a loan based on my current salary. My current mortgage is Conventional so I would be pursuing an FHA loan. I have money for reserves and a middle fico score of 709. What are my chances of getting a 2nd home loan.

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49% DTI should be fine. The only way to tell for sure is to get the income, credit and assets perfect with a loan officer in applicaton form. Then we run it thru Fannie Mae's system called DU. If it comes back approve/elgibile as long as we put all the numbers in corrrectly you should be fine. That's why you have to give the loan officer everything they need so we can give you accurate numbers. Hope this helps please let us know if you need more information. With a 49% you obviously have no margin for error so it all has to be perfect.
0 votes Thank Flag Link Tue Jan 18, 2011
Thanks for your answers. I plan to sell my current home or rent if I don't find a buyer. Even if I rent I know it won't count towards my DTI since I do not have 30% equity in my current home. My only other option as I have been told by a lender is to qualify for both mortgages which I am prepared to do. However, I hear that FHA will go to 45% dti. While 45% DTI is good, the amount I would be approved for for a 2nd home is roughly $1500 per month. This is just a few hundred shy of what I would need to be able to get into the neighborhood I want. Realistically, I need to qualify for a 2nd mortgage of about $1800 which I calculate to be around 49% DTI.. I have lived in my current home for 6 years and it is a conventional loan held by Fannie Mae. I would be pursuing an FHA loan with the intention of putting down 3.5%.

As far as compensating factors go I do have a good credit scores. The middle score being 709. I have some savings and could make payments for approximately 6 months if I run into trouble with a renter. I'm also a Federal Government employee although I'm not sure if that would be considered a factor. Can you share what compensating factors lenders normally look for?

Thanks again for all the help.
0 votes Thank Flag Link Sun Jan 16, 2011
Dear Drogers,

It can be done but having the compensating factors as mentioned below will be crucial. I have a licensed backdground in both mortgage and real estate and would advise that you definately seek direction from your loan officer.

Good luck!
Ariana Loucas
Keller Williams
0 votes Thank Flag Link Sun Jan 16, 2011
Some lenders can go up to 55% total DTI for owner occupied FHA loans. Unfortunately, I don't know of a particular lender that will go to 55% in MD, but you should be able to do so (I can in TX). As long as your middle credit score is north of 640 you should have no problem. Good luck!
0 votes Thank Flag Link Sat Jan 15, 2011
Yes but they is over or under 50% DTI. If you rent and wish to use the rent to qualify you must have 30% equity in the current home. Hope this helps. Let me know if you need more info. Maybe instead of 3.5% you need to put down 5%
0 votes Thank Flag Link Sat Jan 15, 2011
Hi here is the link to a very knowledgable local lender that services your area.
0 votes Thank Flag Link Sat Jan 15, 2011
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