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maximum allowable housing ratio for an FHA loan

by sheilic770 from Bay Shore, New York. Nov 4th 2016 Reply


Jesse Stroup (jessestroup)
#179 ranked lender in California - 587 contributions

That depends on the lenders guidelines, ltv, and credit scores. But I have seen FHA allow 55% DTI ratios.

Nov 4th 2016
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Larry Gray (lgray_312_247)
#1 ranked lender in California - 900 contributions

I have had mortgage loans qualify to a 57% back end ratio and 47% front end ratio. I want to be clear though, that with every home buyer I work with it is essential to examine where there comfort level is in terms of monthly payment and I think most do not want to go beyond 45% DTI if they can help it. There are different situations though wherein having the larger maximum back end and front end ratios can be helpful.One is when only one married partner is going to be on the home purchase loan and thus we would not being using one spouse's income to qualify. Another, would be wherein you definitely have more income that will be coming in the near future, or the resources to pay off substantial debt that will bring the overall DTI down.Renting a room is not taken into account and perhaps that may be planned. However, there is much scrutiny each year over government loans and their performance over a period of time, and the maximum debt to income ratios are determined carefully. Some banks will have different overlays and they may include a lower allowable maximum DTI than FHA allows. In many high priced areas of California we find many renters pay more than 50% of their income to rent which exceeds the 47% front end ratio mentioned. The difference is renters do not get to deduct the substantial interest portion of the payment from their taxes, nor is there the goodly amount of principal applied each month towards equity. It is important to look at rent paid for a comparable home to what your bottom line payment is after the tax deduction and applying the portion towards equity. But again, determine what your maximum payment comfort level is.

Nov 4th 2016
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Dan Paladin (dpaladin)
#3 ranked lender in California - 366 contributions

FHA will allow up to 47/57, front and back end ratios assuming the rest of the fileis strong.

Nov 4th 2016
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William J Acres (William_Acres)
#1 ranked lender in Arizona - 7,402 contributions

Typically, the main emphasis is on the overall debt to income ratio.. not the housing ratio (back end / front end ratios).. FHA will allow DTI's up to 57%, but most lenders will cap you at 50%... There are many more things to consider when and if the guidelines will allow these expanded ratios, but if you meet the requirements, they can go as high as 57%.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com NMLS# 226347

Nov 4th 2016
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