What is the Maximum Debt Ratio- (aka DTI) with a FHA Loan with QM?
Much has been written about how QM will result in more Turn Downs or credit denials for Home Buyers using FHA Financing due to new Federally Mandated restrictions regarding Mortgage Loans. QM is also know as Qualified Mortgages, as defined in the Dodd-Frank legislation. It went into effect the same time as ATR, ATR stands for Ability to Repay. This basically codified how and what lenders must verify, document and consider when qualifying FHA borrowers for FHA Loans under QM/ ATR. FHA stands for the Federal Housing Administration.
Fortunately, the legislation gave the "agencies" such as FHA up to 7 years to come up with their own QM rules. So the quick answer is that the Max DTI (Debt to Income Ratio) for FHA continues to be 50% for qualified Borrowers. We are even able to exceed 50% DTI with well qualified borrowers for FHA Loans and FHA Jumbo Loans.
With the new reduced FHA MIP premiums (.85% per annum vs 1.35% prior), FHA Loans are a better choice for many borrowers.
Under QM, FHA loans are available up to FHA county Loan Limits with just 3.5% down. Most conventional loans require 5% down up to $417k, and 10% down above that figure.
The real point to this post is that you must work with a Loan Professional that knows the guidelines and rules so that you can get the right loan for the home you want. Calll the Loan Pros at VanDyk Mortgage at 866-900-2342 direct or apply online at vandykfunding.com.
We service homebuyers in CA, GA, IN, MA, MI, VA, WA and WY.