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What is the max DTI for FHA? Trying to qualify for a 275k purchase FHA or conv. primary res

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Why is it that one lender can qualify me for an fha loan at 250k but have had difficulty getting a second offer to compare rates/fees with. Specifically I tried another FHA lender who says could only approve me for 100K or less ...? Is it true that FHA allows for higher debt to income ratios? Is the max 55 or can you actually go to 59? Are you required to show reserves with conventional and not with fha? thanks!

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June 09 - Oakland

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Bob Lowery, "Bob Lowery"
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Bob Lowery, "Bob Lowery"

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Good, I just want to make sure because you can only have one FHA loan at a time. I don't specialize in closing costs in California, so I would not be a good source for closing costs and a GFE.

Have you filled out a Zillow request? You should get multiple quotes if filled out properly. Post the loan request # here and I will take a look at it.

Or you could contact this California mortgage pro. He is very good. Here is his Zillow Profile.

Gregorio Denny

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June 09

Bob Lowery, "Bob Lowery"
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Bob Lowery, "Bob Lowery"

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Alex, our guidelines have changed. FHA now has the underwater rule. To use the income on a departing residence, you will have to have 25% equity in the home. This is effective June 8th. I was just reading the new guidelines and thought of you...

Now, just because we have this rule doesn't mean everyone does, but I just wanted to alert you that there may be an issue going FHA with some lenders.

Good luck.

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June 10

alexwemyss
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The current house does not have an FHA on it. This would be the first year I have a written lease rental agreement from my parents so its not on that 4506T, but yes we share the same last name. It just seems like I should be able to get one more competing quote from an FHA direct lender at 250k if this lender can do it. Any idea on average what the total estimated funds I would need to close on a loan for 250K I should expect to see on my good faith estimate? thanks very much.

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June 09

Bob Lowery, "Bob Lowery"
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Bob Lowery, "Bob Lowery"

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Ah, I see.

The underwater rule is only on conventional loan. So, conventional does not appear to be an option. You don't need the equity to count rental income on a FHA loan and leases are acceptable if they were not rented the prior year.

Is the home you will be renting currently a FHA loan?

I could see the underwriters/companies questioning the lease since a family member. This could be tricky.

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June 09

alexwemyss
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Thanks Bob, My folks are renting my existing house squashing the better part of my housing payment but the lender cant use it as income as its underwater. So effectively I make 85K and dont have much of a mortgage payment. Trying to buy a house in the CA Bay Area for 250k is very tricky - if I could get to $275 that would be more likely. Even if I cant do that to get a competing quote as I think the first lenders fees are high would be terrific! I have no dependednts and could even do 10% if needed to go conventional.

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June 09

Bob Lowery, "Bob Lowery"
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55-59% is too high, even for FHA. I have gotten the system to approve that high, but most companies have internal guidelines that cap them much lower. It really depends on each lender and their guidelines.

Is someone else helping you make the payments or do you not show all your income? Why would you want to go to 59%?

The target is <31% for housing payment and <45% for total debt ratio. But, I have gone higher when it makes sense and the customer is comfortable with that. (ie...other income and/or no dependents)

You do not need reserves for FHA, but it is recommended.

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June 09

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