I have a DO accept with a back ratio over 43. The underwriter will not approve it without compensating factors. Is this standard industry practice?

First: Thanks for the Question!

This is not "really" standard industry practice.  For government loans yes, but not for conventional.  Also, for government loans the underwriter usually writes the compensating factors in the file (during the underwriting process) for HUD in case they have any questions later. 

1. First I would talk to my Account Executive to find out if giving compensating factors is a new company policy or if this is a condition the underwriter "feels" will make the loan stronger.  If it is not a company policy than DU (Fanniemae) made the decision when they gave your loan the Approve/Eligible.

2. If it is a company policy or you can't get your AE to help you; than here are a few questions you can ask yourself before you send in the compensating factors:  Was the borrower already in that range of DTI before?  What is the borrower's disposable income?  What is the borrower's credit score? Does the borrower have over 2 months in reserves? How long has the borrower been on their job?  Do they have any mortgage lates?  Any positive answers to these questions can be used as compensating factors.

FYI...... I spoke to the person who asked this question and the underwriter was not using the borrower's overtime (the borrower had been employed with the same company for over 3 years), making DTI higer higher than it should have been.  Make sure your income matches your lenders.

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