my wife and want to buy this house we love. issue is that we both have mortgages under our names from before we got married and our dti is too high

Asked by Ab5000, Euless, TX Wed Jan 25, 2012

we are both young 29 and 30 with total annual income of 105k. we both have 750 credit score. issue here is that i bought a house with my dad back in 2007 and i was living there until last year when i got married and moved out.
my wife has home equity loans under her name totaling about 280k. her mother (my mother in law) made her cosign few years ago before we got married.
our combined DTI is too high for any bank to approve us for a loan. bank of america suggested that we go with an FHA loan and just me and my dad on the mortgage for this new house. asking price is 235k and we want to put down 20k. at first everything was going great until at the last min the underwriter said this loan cannot be processed because they need to add my spouse's debt in the calculation ,. which puts the DTI over the limit again.
so they wasted about 2 months of my time and charged me for "services provided" where they basically lied to me to begin with. please help

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Scott Killian, Agent, Bedford, TX
Fri Feb 10, 2012

Hope your questions have been answered. My office is in Euless area and I would be happy to help in anyway.

Scott Killian
Scott Real Estate, Inc.
Phone: 817-703-1165
0 votes
, ,
Fri Jan 27, 2012
The sad fact is that the "big banks" are hiring many loan officers (and I use the term loosely when referring to them) who were unable to pass the stringent test we take to become NMLS Licensed Loan Officers. So they just don't know the rules. They hide out at the banks.

So you probably got a loan officer who was in another state and did not know that Texas is a community property state. That means we are required by FHA and VA to count the nonpurchasing spouse's debts. Oddly enough we don't need to for conventional loans. Perhaps you and your father could go conventional, but with co-signers, you still need to watch out for your debt ratios.

Back to FHA, If you can provide proof that the other individual on the co-signed loans has made the payments, with cancelled checks, and they have been within the month due, they should exclude them from your ratios. So you might as well put your wife back on the loan so that you can use her income.

If BOA has an internal "overlay" to not do that, check with another local mortgage broker. They will most likely have an investor/lender who will follow the FHA guidelines.

Good luck, Barbara Coker, NMLS Licensed Loan Officer #228545
Over 29 years doing this!
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0 votes
Dallas Texas, Agent, Dallas, TN
Wed Jan 25, 2012
All lending is based on DTI have you consider selling the home(s) or lease ? Reduce your overall DTI

Lynn911 Dallas Realtor & Consultant, Credit Repair Advisor
0 votes
, ,
Wed Jan 25, 2012
If you can document that other parties are paying the existing mortgages I can exclude those payments from your debt to income ratios.

Please feel free to call for more information.

John Burke
ENG Lending
0 votes
Ab5000, Home Buyer, Euless, TX
Wed Jan 25, 2012
my dad makes the mortgage payment on the property and my mother in law makes all the payments for the home equities under my wive's name
0 votes
Ab5000, Home Buyer, Euless, TX
Wed Jan 25, 2012
thanks for your replies, connie i will give you a call.
i asked my dad to see if he can refinance, and he is ok with that. we did think about this option and at that time bank of america told us that it is ok to keep things the way they are. i can certainly ask him to refi and get my name out of it. however, my mother in law has completely refused to help us out and she states she doesn't have enough income to refi/take those mortgages away from under my wive's social.
we can take another 7k out of my wives ira to make slightly larger down payment i think. my wife and i dont have any major debt besides the mortgages. just a couple of car payments of total $500
0 votes
, ,
Wed Jan 25, 2012
Hi Ab5000,

Who's been making the payments on the house you own but moved out of?
0 votes
Connie Hall, Agent, Arlington, TX
Wed Jan 25, 2012
I'm sorry the bank that the loan had to go all the way to underwriting before they asked all of the questions needed upfront. Mortgages are much tighter than they were a few years back. I would recommend that you contact a broker, not another bank, for their opinion about your situation. This will help clear up any confusion before trying to go forward on another loan process. Just be sure to tell them all of the details.

I work with a couple of great brokers so you can call me @ 817 673-1224 and I will be happy to give you their names and numbers to contact. Whether you get the same or a different answer, it will be worth the effort.
0 votes
Keith & Kins…, Agent, Verona, WI
Wed Jan 25, 2012
Forgive me if I'm asking the obvious, but have you approached your Dad and her Mother to see if they could refinance to get you and your wife off their loans? It seems to me that getting off the mortgage on these properties would be your best solution. It will save you from a lot of headaches (and potential family disputes) down the road.

The only other options I see are:
1) Save a larger down payment to the point of improving your DTI enough to get the loan.
2) Pay down debts (whether it's just these properties or car loans, credit cards, etc).
3) Increase your income. Maybe you can work a second job or start a business on the side.
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