Financing in Dallas>Question Details

DFW C.J., Home Buyer in 75228

I'm thinking of buying a home (1st time). Is a DTI ratio of 17/32 good enough to ask for a loan and get pre-approved?

Asked by DFW C.J., 75228 Thu Apr 5, 2012

Hello,

I'm thinking of buying my first home. According to topagent.co DTI calculator, my ratio is 17/32. With a credit score of approx. 700, do you think it would be reasonable to look for financing? I've been reducing my debt for the last 2 years so I don't really have a down payment at this point. (Maybe FHA is the way to go?) I want to be realistic before wasting my time and the bank/CU/broker's time.

Thanks in advance for your answers.

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I used to be a big fan of FHA loans, however, not so much anymore due to Mortgage Insurance requirements, and I just really don't know why so many Realtors/Lenders continue to push this loan (maybe those that read this can explain why). There are better programs available for a lot of home buyers now.

For instance, you say you are a first time home buyer. We have a program that you might qualify for. It requires a 5% Down Payment. There is no mortgage insurance. All funds including the Down Payment, yes, even the DP, can be gifted from a relative. Even though we collect extra escrows at closing for taxes and insurance, the first payment is not due for at least 4 months after closing, i.e. close in May, the first payment would not be due until October 1. The maximum loan amount is $417,000. FHA in the Metroplex can only have a base loan amount of $271,050.

The following is a comparison based on a purchase price of $150,000. Rates used are for example purposes.

FHA Example - Interest rate of 3.625%. Prin. and Interest is $671.69. Monthly mortgage insurance is $150.78. Total of the two is $822.47.

BBVA Compass FTHB - Interest rate of 4.500%. Prin. and Interest is $722.03.

That's a difference of $100.44 a month. Sure, it may cost a little more at closing, but without having to make a payment for 4 months (it would be 1 month on FHA), and saving $100 a month, it wouldn't take long to recoup the costs and be ahead of the game.

AND, depending on your income, you may also qualify for a 3% DP loan, also with no PMI, and again, all the funds including DP can be gifted.

Do your homework. Get educated on what exactly might be the best program for you, but don't just jump into doing an FHA loan as it might cost you more in the long run. Then proceed with purchasing a home.

Feel free to contact me if you have any questions.
0 votes Thank Flag Link Sat Apr 7, 2012
Your DTI looks good to me. You will need a down payment in most cases. Typically 3.5% of your purchase price with FHA type loan. Your credit score looks good.

There are other loan types that might work for you as well.

We need to get you with a great loan officer like Bill Merritt below and take a look at the whole picture, visa, job, DTI, reserves, income source, and see if we can get you a loan. i don't think it is a waste of your time if you really want to buy. That's the very first step.

Bruce
1 vote Thank Flag Link Fri Apr 13, 2012
Bruce Lynn, Real Estate Pro in Coppell, TX
MVP'08
Contact
You are being responsible by making sure your ducks are in a row beforehand.
As others have stated - yes - with a FICO of 700 - you should not have difficulty.

Your first step is to meet with 2 or 3 Mortgage Brokers/Bankers to see what they can offer you.
Then get a Pre-Qualification letter or even better an actual Pre-Approval letter from a Lender.
If you have these - Sellers will know you are a serious Buyer.

With regard to your Down Payment issue - yes most Conventional Loans will require a down payment
of at least 15-20% of the purchase price I'm afraid. Yet - FHA only requires a down payment of 3.5% !

The reason why Banks and Lenders have upped the Down Payment requirements from the Housing Bubble is that they are shifting the "market risk" in properties from the Lender to the Borrower !!!
This also eliminates the likelihood of people becoming "upside down" again, or owing more than the property is worth at any point in time.

Anyway - sounds to me like you are on the right track - keep it up !!!
Best wishes -
JAY NAREY ABR, ALHS
Keller Williams - Preston Rd.
jaynarey@kw.com
Web Reference: http://www.jaynarey.com
1 vote Thank Flag Link Thu Apr 5, 2012
Give me a call 214 -935-8781
The guidelines:
• 580 Platform
• 3-tradelines
• we also recognize alternative trade lines
• less overlays
• in house funding, processing and underwriting
• 620 credit on conventional
• 47% DTI ratio or lower
• 3.5% down payment
• close the average loan for Refi /new purchase in 21 days
0 votes Thank Flag Link Mon Dec 10, 2012
Wow! 53% DTI.
You'll have a lot of difficulty finding lenders in that range.

No one seems to have answered your question, though. Except Ed from Klamath Falls. His 40% is slightly below the normal maximum of 43%. While some lenders may allow up into the 50s, they are much harder on borrowers than those with lower DTIs. And, I assume that the DTI is your current ratio, meaning it will only get worse when you take out a loan.

I urge you to reduce your debt and look around before committing to buying anything with such a ratio. Refinancing might help, but if you're a first time buyer, you can't exactly take out a HELOC to reduce the monthly payment.
Web Reference: http://www.Mortgages-TX.com
0 votes Thank Flag Link Mon May 28, 2012
Yes ratio are perfect you can go COnventional and put 3% down, any questions feel free to call me 214-557-3312
0 votes Thank Flag Link Sat Apr 14, 2012
Thank you very much guys, I really appreciate your answers.

I'm not really interested in revitalized neighbourhoods or the HUD program. Thanks, though!

I'm not in a hurry to buy either. I just wanted to know if there was any credit/grant/help for teachers or first time buyers to get a downpayment, considering that there are options allowing 3.5 - 5% only in case I could get a good deal.

I'm checking my options. I read about CHIP loans with 100% financing and "no PMI" but I didn't like loan conditions, LPMI, etc. I'm not convinced with FHA either. I have a credit of 715 (checked 2 days ago) that should go up a bit since I'm about to finish paying for my car and another small personal loan next month. I think I can get better options if I keep saving.

Anyway, I followed everyone's recommendations and I contacted a real estate and three lenders. Apparently the combo "H1B + teacher" is not really popular. The real estate agent said "no foreign nationals" and the other 3 people wouldn't even discuss numbers with me due to lack of down payment at this point. Ah well.

Again, thanks a lot for your wisdom! I've learned a lot from this forum, being able to focus my research.
0 votes Thank Flag Link Sat Apr 7, 2012
Usually 40% dti is the average, however, depending on the underwriter and the lending institution they all have different qualifications.
0 votes Thank Flag Link Sat Apr 7, 2012
Everything looks good....from what you gave us.
FHA requires 3.5% down payment and potentially another 3% in closing costs.

Checkout this link:
http://www.cuoftexas.org/pdf/Home%20Possible%20-%20CU%20of%2…

You might also check this out:
http://www.tsahc.org/pdfs/2012_News_Release_SF.pdf

I think you can move forward with preapproval and let us know if we can assist you with the home search portion. We'll work to get you all the discounts for which you qualify.

You can search for homes at the link below:
0 votes Thank Flag Link Thu Apr 5, 2012
Bruce Lynn, Real Estate Pro in Coppell, TX
MVP'08
Contact
Yes, it is good enough, find my contact info below, call/email me for the pre-approval, I will walk you through the whole process with honesty and integrity, I am here to help, thanks again, Rahman
--
Faizur Rahman, Ph.D.
SFR ABR CIAS
Real Estate (Realtor) and Mortgage Broker/Owner
Bengal Brokerage LLC and DBA Bengal Mortgage
2070 W Spring Creek Pkwy, Suite #314, Plano, TX, 75023
Phone: (469) 766-4015, Fax: (214) 764-4047
http://www.bengalbrokerage.com
NMLS ID: 351183
TREC ID: 0573317
0 votes Thank Flag Link Thu Apr 5, 2012
Thank you very much for all your answers. Do you know if there is any assistance for first home buyers or teachers (Dallas) to help me with down payment? I wanted to talk with lenders/brokers in case I could get a home during the summer and that does not give me a lot of time to save, even when FHA only requires 3.5%.

Thanks again for your assistance!

CJ
0 votes Thank Flag Link Thu Apr 5, 2012
Yes, we offer the Good Neighbor Next Door program for Teachers, and I would love to talk to you about it since my parents are both retired teachers, so teachers are very near and dear to my heart. There is also downpayment assistance to help you with that 3.5% in addition to ways to structure your deal where the seller pays for up to 6% of the purchase price toward closing costs and pre-paids (taxes and insurance). You can call me any time to talk about this 972-854-3270.
Flag Thu Apr 5, 2012
those are awesome ratios .. Give me a call and I will be happy to hope you with you needs and any questions you may have 214-557-3312
0 votes Thank Flag Link Thu Apr 5, 2012
Sounds like you have been doing all of the right stuff. Call me at 214-643-6021 and I can do a quick pre-qualification for you before you have a Realtor start working with you.
0 votes Thank Flag Link Thu Apr 5, 2012
It sounds very good to me. Have your Realtor introduce you to the loan officer they trust the most. Gather all of the support documents that will be needed to apply for a loan and meet with the LO face-to-face, have them walk you through the process and options available, good luck, home this helps,

Jim Simms
NMLS # 6395
JSimms@cmcloans.com
Financing Kentucky One Home at a Time.
Web Reference: http://jamessimms.com/
0 votes Thank Flag Link Thu Apr 5, 2012
You'll need to begin focusing on getting your down payment in place to ensure that you have good home buying options. I'd suggest speaking to a lender now so you'll know how much down payment to save based on how much you can qualify for and the loan type. That is definitely NOT a waste of time :) If you need a mortgage lender I can recommend several.

Thanks!


Andrea Brooks
469-450-1326
http://www.topagent.co
0 votes Thank Flag Link Thu Apr 5, 2012
Hello,

This is a very good question. Now is a good time for you to start looking for a home. With a credit score of close to 700 and a pretty good DTI, you could get pre-approved with no problem.

As for your downpayment, There are a few programs still out there that can assist you with your downpayment. I think a good place to start would be HUD's $100 down payment program. I've included a link below.

http://portal.hud.gov/hudportal/HUD?src=/program_offices/hou…

Please feel free to reach out to me if you would like to speak more in detail about your options. I would love to assist you in any way I can. Thanks for the question!


Scottie Smith, II

REALTOR/Broker

Scottie Smith, II & Associates

Real Estate Advisors

Buy | Sell | Rent | Invest

"All Things Real Estate"

c: 832.647.1231
f: 214.509.6918
scottie.smith@scottiesmiththesecond.com
http://www.scottiesmiththesecond.com
0 votes Thank Flag Link Thu Apr 5, 2012
That is well within the guidelines.

Tom Burris
Mortgage Banker
DallasLoanGuy.com
(214) 763-4629 cell/text/nights/weekends(Really!!)
tomburris@dallasloanguy.com
Lending all across the entire Great State of Texas!!
NMLS# 335055
Search Dallas area MLS for FREE. No registration => http://www.ntreisinnovia.net/cgi-ntr/BR_login?0501134
0 votes Thank Flag Link Thu Apr 5, 2012
It is absolutely reasonable for you to check into financing. I have been working a few first time buyer's lately in worse shape than you. From where I stand you are looking fairly good.

Give me a call when you can to get started

Kevin D. Brown
Owner/ KDB Properties
972.379.8931
Kevin@kdbpropertiesdfw.com
0 votes Thank Flag Link Thu Apr 5, 2012
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