Financing in Phoenix>Question Details

Fha Ugh, Home Buyer in Phoenix, AZ

My DTI is currently 28%. I've had no lates since my BK in 2005 and my credit score is 695. I just got declined for an FHA from M&I, too

Asked by Fha Ugh, Phoenix, AZ Wed May 18, 2011

much $ debt? I already own a house that is upside down but my DTI is only 28%, even with another house payment of $800 my DTI would only be 37%. I don't understand how M&I can reject the loan. They are saying I have too much NEG equity in my current home and I have too much $ debt (regardless of income) for them to make the loan comfortably. Is it worth trying another lender at this point? I heard M&I is pretty lax and if they wont do it then chances are no one will.

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We hear this often with the big banks and their concern for "buy and bail." We are currently financing lots of clients with profiles similar to what you have described. We are a direct lender (we sell directly to Fannie Mae and Ginnie Mae, as well as most of the big financial instutions you see driving down the street). Since we sell direct, we underwrite to our own guidelines versus those of the big banks. We can definately finance with a 37% DTI (we go up over 50% on FHA with an automated approval). I would love the opportunity to disucss your situation to see if we can assist you. I can be reached at 602-820-8477 or
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1 vote Thank Flag Link Wed May 18, 2011
It is impossible to know without knowing more details. But, like some of the people below have suggested, the lender might be concerned about a "buy and bail" scenario. What is your justification for the new house? Is it at a considerable distance from your corrent home, a lot closer to work?

There are a few lenders responding here. I would advice contacting one, or a few of them, and try to get more detailed information. The final decision is up to the UW, and they might be able to get you in.

Carlos J. Ramírez, PC, ABR, CNE
Associate Broker/Realtor, HomeSmart –
Certified Negotiation Expert (CNE)
0 votes Thank Flag Link Wed May 18, 2011
Sorry to hear about your experience, it sounds like you've just been declined due to an "overlay" specifically tied to M&I Bank, I'd suggest having your underwriting findings released to you. Not all banks have overlaying conditions. We have several banks that will fund a loan based solely off your underwriting findings. They MUST be an "Approve/Eligible" and the rest is verifying documentation and eventually granting you the keys to your home. Let me know if I can help!
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0 votes Thank Flag Link Wed May 18, 2011

Ask M and I how it "scored" through automated underwriting. If it was an "accept" or an "approved eligible" then I would bet someone will do that loan. If not, it becomes a manual underwrite, and at that point it is purely underwriter discretion although you haven't listed anything in what you typed that would necessarily disqualify you from a manual.

I don't lend in Arizona but if you would like I would be happy to look at your application and give you an impartial opinion.

Either way, best of luck.
0 votes Thank Flag Link Wed May 18, 2011
your numbers look good but I guess the bank just doesn't like the odd that you will walk away from the 1st house, and drags their loan (2nd house) into a big lien/foreclosure mess. Try a higher down payment !
0 votes Thank Flag Link Wed May 18, 2011
It is true that this seems to be a common reoccurring scenario, but you do have what sounds like the qualifications for a new home loan. Every situation is different and as it was stated here, some banks are looking more closely at the risks and choosing not to take them. Other lenders will play by the book and it is with them that you have a home for your financing. There are a couple of selling points that you have to consider emphasizing to the bank reviewing your loan. If you are able to do this, than you will be fine. Please feel free to call me anytime.

Matthew Remus
0 votes Thank Flag Link Wed May 18, 2011
I can help you with this one. The biggest challenge is the buy and bail but if you have the income it could work. Give me a call.

Matt Puzz
Licensed Loan Originator
Amerifirst Financial Inc.
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0 votes Thank Flag Link Wed May 18, 2011
Some lenders--especially if someone has filed for bankruptcy within the recent past--are only willing to lend to borrowers who's DTI won't exceed 30% with that loan. The amount of negative equity plus the recent bankruptcy filing and high DTI all combine to make you a higher risk, and that combination offsets your credit score in some lenders' eyes.

Yet, some lenders--especially some private ones--might be willing to lend to you. You'd most likely end up paying a higher premium--unless you're able/willing to put more down.

Another alternative that you might want to consider is buying the second property with creative financing.
0 votes Thank Flag Link Wed May 18, 2011
It depends what the mortgage balance is and what the property appraised for. Without that, it's hard to tell. What are those numbers?
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0 votes Thank Flag Link Wed May 18, 2011
Your situation sounds workable but the only way to know is to speak to a couple of other lenders in the Valley. I would go with a Banker/Broker that has greater options to place your loan. They are more likely to have the options you need.

Arizona Homes for Sale by a Guy from Iowa
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0 votes Thank Flag Link Wed May 18, 2011
I'm sure I can make your loan. But I will need a little more info to be sure. Give me a call today to go over details.

Steve 602-622-7469
0 votes Thank Flag Link Wed May 18, 2011
FHA is very strict, it is not usually used for people who own another property. It is common that they decline anything and anyone not completely within their guidelines with no exceptions. You should definately check with a local and trusted mortgage broker, they can prequailify you at no cost, they will look at your credit plus your financials and let you know if there are any other mortgage programs that you may quailify for. Anyone else is guessing...…

Please see my blog for a complete list of tips and advice on getting a mortgage
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0 votes Thank Flag Link Wed May 18, 2011
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