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.