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Need a VA loan but have a car payment which is killing my DTI. Do I really have to wait until it is paid off?

by mike68 from Long Beach, California. Aug 17th 2016 Reply


Ralph Richard Guertin (ralph@absolutelowrates.com)
#136 ranked lender in Florida - 637 contributions

How many payments left??

Aug 18th 2016
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William J Acres (William_Acres)
#2 ranked lender in Arizona - 7,797 contributions

More info needed, but Maybe or maybe not.. Lending guidelines state if an obligation has less than 10 remaining payments, then they can remove the payment from your ratios.. but this is subject to an underwriters discretion and they will only allow it if this does not cause a financial hardship.. Example: you make $3500 per month.. and you have a $500 per month car payment. Your new mortgage payment is $1400 per month.. combined, your DTI is now 54%, which is outside of lending guidelines, but because there is fewer than 10 months left, the lender ignores the $500 car payment putting your ratio at 40%, which is within guidelines. However, if you make $3500, then your taking home about $2400, and if you deduct the $500 car payment and the $1400 house payment, that leaves you with $500 for all your other expenses.. in this scenario, the lender is likely to deny your loan since it's not logical that you would be able to pay all your other bills on just $500 per month.. However if the borrower is a high income earner, and at 55% DTI, the borrower still has $5000 per month left over, then it's more than likely to be accepted.. 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

Aug 18th 2016
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Larry Gray (lgray_312_247)
#4 ranked lender in California - 1,127 contributions

Are you certain you are over the maximum debt to income ratio? Lenders may have different overlays in regards to that. I know we just use whatever our automate underwriting allows. so if you get approved with a DTI higher than55% then that is acceptable. On the other hand, a car is essential, and so it may be good to have that in your debt to income ratio in looking at what monthly payment you can truly be comfortable with. No question, a lot of buyers in the many desirable locations of California ended up with a higher total monthly (PITI) payment then their rent and sometimes substantially more. One does consider the interest deduction, the portion that actually goes towards paying equity and the other, less tangible reasons we all buy a home in an area we like. I would certainly gladly be another potential qualifying lender for you to compare, so do reach me via my profile.

Aug 20th 2016
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