FHA Compensating factors, high DTI ratio's

By
Mortgage and Lending with Mortgage Miracles Happen, NMLS ID: 1289680 NMLS # 285653

The industry standard DTI (debt to income) ratios to get approved for a mortgage loan is 28 /36% of your gross income.  If you are having a manual underwrite of an FHA loan, this is the typical ratios.

The automated system (electronic approval) will give approvals higher than 50%.  We've seen at least 55% and some processors have had in the hight 50% for the backend ratio. 

How is this?

One:  Anytime you have additional compensating factors, the higher the likelihood of getting a higher than 50 DIT approval.  Without having compensating facotrs, the likelihood decreases to have ratios greater than 49.99%

Two: The bank /lender that is funding the loan has to allow for the true DU approval without additional overlays.

Most banks and credit unions have a strict set of underwriting guidelines that will not allow the backend ratio to be greater than 49.99% with their automated underwriting. 

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