First-Time Homebuyers: Debt-To-Income(DTI) Explained 2024

⭐Have mortgage questions or want to plan to buy a house?
Pick a time that works best for you here (It's free:)
calendly.com/jennifer-beeston
Email [e-mail] for DTI sheet
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⭐ Call Me: My cell phone is 707-478-0637 I am happy to help. Let’s get you home!:)
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Licensing info: Jennifer Beeston, SVP Mortgage Lending NMLS 247743 at Guaranteed Rate, Inc. NMLS 2611 Branch Address: 1750 N University Drive, Coral Springs, Florida, 33071 Equal Housing Lender
For licensing, go to www.nmlsconsumeraccess.org
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Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Restrictions may apply, contact Guaranteed Rate for current rates and for more information. All information provided in this publication is for informational and educational purposes only, and in no way is any of the content contained herein to be construed as financial, investment, or legal advice or instruction. Guaranteed Rate, Inc. does not guarantee the quality, accuracy, completeness or timelines of the information in this publication. While efforts are made to verify the information provided, the information should not be assumed to be error free. Some information in the publication may have been provided by third parties and has not necessarily been verified by Guaranteed Rate, Inc. Guaranteed Rate, Inc. its affiliates and subsidiaries do not assume any liability for the information contained herein, be it direct, indirect, consequential, special, or exemplary, or other damages whatsoever and howsoever caused, arising out of or in connection with the use of this publication or in reliance on the information, including any personal or pecuniary loss, whether the action is in contract, tort (including negligence) or other tortious action. Guaranteed Rate, Inc. is a private corporation organized under the laws of the State of Delaware. It has no affiliation with the US Department of Housing and Urban Development, the US Department of Veterans Affairs, the US Department of Agriculture or any other government agency.
Timestamps:
0:00 Why Debt to income Matters
0:25 DTI Calculator, Email Sandy!
1:00 What is Front-End DTI
1:15 What is Back-End DTI
2:10 Back-End DTI Exception
2:35 What is a Good DTI?
3:50 What if your Income is Decreasing?
4:15 Commission Income
4:50 Salary Workers Calculate with Ease
5:50 Lenders Look at Income In Specific Way
6:35 Comfortable Mortgage Payments
7:00 Calculators Aren't That Accurate...
8:50 Ideal Front-End Ratio??
9:10 No Universal Frontend Number
9:50 Back-End DTI Formula
11:05 Credit Card Exception
11:22 What to Do About Student Loans
12:00 What if You're Doing a VA Loan?????
13:10 We Don't Look at College Payments?
13:35 Try out the DTI Calculator
15:10 What if you Have a High DTI?
15:30 The Budget QUEENS!
16:10 Take Advantage of The Resources
16:35 Cya Soon!
#debttoincomeratio #firsttimehomebuyertips #mortgagecalculator #firsttimehomebuyer #debttoincomeratios

[@JenniferBeeston]

Have Mortgage questions or want to plan to buy a 🏡. Hop on the calendar here calendly.com/jennifer-beeston/preapproval-q-a

[@sabrinajoseph8664]

I'm a new subscriber, I ran across your page today and have been binge watching your videos on my Friday evening. I'm in the process of purchasing my first new home, with a closing date of 7/2. Your content has eased my mind, and I now know that I don't have anything to worry about, I just need to trust the process. You're thorough, professional, and to the point. Keeping doing what you're doing for us, we appreciate your years of knowledge. Blessings to you and your team.

[@JenniferBeeston]

:) I am so glad the channel is helping.

[@disneyredhead1976]

I am so glad I came across your channel! I am tired of renting and want to purchase my first home using a VA loan. This video was extremely helpful to understand the debt to income!!!

[@michaelleahy6848]

Great content! Can you do a video showing how making a loan amort schedule principal chunk early (if a person can afford it) vs in recurring monthly amounts, can make a big impact, and especially vs later. Essentially, the 'cost' for shortening the loan is much cheaper because the massive amount of interest saved. Looking at a potential one time 4 year principal chunk payment. Have fun with this one!

[@MinhTucson]

Great ideas ❤

[@Cancer3686]

Thanks for the information. Would you mind doing a video on how PMI is calculated?

[@JenniferBeeston]

It is funny that you ask, I actually have a video coming out next week about how you really need a lender to calculate it and why all the mortgage calculators are wrong on mortgage insurance

[@lechelle51]

Thank you for this video! Can you make a video with you doing the calculations for “John Doe’s” DTI ratio? I’m a visual person :)

[@dianyadira]

The commission breakdown is perfect. Unfortunately i took a decline since i work in tech so it makes sense on talking to the lender.

[@darklordofyocommunitah4781]

Great info! ❤

[@JenniferBeeston]

Thank you!

[@darklordofyocommunitah4781]

@@JenniferBeeston You're welcome 😁 I'm definitely taking notes. Just did a Wells Fargo online DTI calculator. I scored around 24%! Fingers crossed for the real thing in a few months!🤞

[@Shanvle]

Would refinancing my car loan to lower the monthly payment amount be helpful in lowering my DTI?

[@JonahThearchitect]

Can lender fee be waved through employer

[@josephanthony1655]

Besides Credit Karma how else do I go about checking my credit ??

[@JenniferBeeston]

free credit report annually and most credit cards have a credit monitoring feature. Credit karma is good for monitoring though

[@felixpeterman9303]

front end 36D back end 38W

[@chuckmaddison2924]

When i had a loan what pissed the bank off was how i got paid. It was made up of a base rate plus additions which were a constant and both increasing every year. 25 years. They didn't like the additions as it doubled my base rate.

[@JenniferBeeston]

That’s super odd. If you had a two year of bonuses, we could use the bonuses especially if they are increasing. You could’ve just been working with a lame Lender. Sadly, there’s a lot of them.

[@chuckmaddison2924]

@JenniferBeeston it was called composite pay. Due to the strange hours to prevent big fluctuations in people's pay. The penalties were averaged over the year and so paid continuously. Even paid on vacation. But we didn't get the 17% extra loading, which is normal for vacation pay.

[@etheljoyvillamayor4]

My credit history and payments has been good since 2020. But I have some collections and delinquency from year 2017-2019. Everytime I asked for pre approval, they always refer me to credit fix company bec of those in my history. But they said it wont fall off my history even though i pay it off. So i dont know what to do😢

[@MikeMaryandRusty]

Our lease is up Aug 31st of 2024, when should we look to be starting the application process as we don't plan to re-up the lease?

[@JenniferBeeston]

May is when you should get fully underwritten and preapproved:)

[@lindawaters9377]

Why do loan officers be dishonest with people?

[@JenniferBeeston]

As with any profession you have honest and dishonest people.

[@susethmorales3101]

What type of debt do lenders look at ?

[@shadeaquaticbreeder2914]

5:44 why can't you just get approved based off of what you make working 40hrs if you always work more than that? Wouldn't that be easier?

[@TMKJG24]

I pay off my credit cards every month. Does the minimum amount payment still go towards the DTI

[@michaelleahy6848]

If you have a balance showing on your most recent statement when applying, the minimum payment will be used in the DTI. This is an instance where funneling modest balance from multiple cards onto one card (bal trfr) will help, because each card has a minimum payment which all get added to impact DTI. A lender like Jennifer may be able to help before it gets to underwriting, but if you are reporting a balance, it likely is included.

[@ZER0_G]

The answer to your question starts at 10:53

[@TMKJG24]

​@@ZER0_Gthx just didn't want to get confused

[@Biggity_Brown]

Will they only use stuff that’s on my credit report? Or will they count groceries, gas etc? I don’t have any debt but the mortgage payment alone would probably put me at 36-40 percent DTI. If they would count anything besides my mortgage I’d probably be in trouble.

[@JenniferBeeston]

We don’t count groceries or gas, but we count what’s on your credit report so if your groceries and gas are all on credit cards, we’re going to be looking at the minimum monthly payments. Also, if you pay child support that comes into play but if you’re buying groceries and gas with cash that does not play into the picture.

[@amywantz2427]

How do you calculate DTI if someone has been a 1099 full time employee for two years and is going to W2 in January?

[@JenniferBeeston]

We would go off of the new W-2 income because the 1099 is no longer relevant

[@TheSabrinaSimpson]

Hi Jen, Are you able to do a DTI breakdown and important info to know for someone wanting to buying a second home and plans to rent their first home? Thanks.

[@JenniferBeeston]

Let me think about how I would do that video as it’s gonna very based on the loan program.

[@jeff3282]

Is there a max front end DTI for VA loans? I have no debt except my mortgage. I save $7000/month after all living expenses and current mortgage payment. Im wanting to buy a house that will make my DTI 38%. Can my back end DTI be the same as my front in? With the new mortgage payment I'll still be able to save around $5000/ month.

[@JenniferBeeston]

A 38% debt to income would not scare me even slightly as long as you pass residual. Where I start to see VA fussy on front end debt to income is if you push over 50. On the backend I see over 50 all the time but I can see the computer get a little bit fussy if the front end is over 50. So depending on the situation we can do a manual underwrite but in reality it’s not like you want your debt to income to be 60% on the front and back as your life would suck For lack of a better term

[@dbdb3447]

If my credit is 650 ... What is americas credit? The people that pay taxes and they have been spent! And all the money we accumulated is gone? What is Americas account?

[@earlthomas7464]

I would like to apply for a new credit card next month; I plan to apply for a mortgage in September, should I wait?

[@JenniferBeeston]

Do you need the new credit card. If you don’t need it then skip.

[@MrMagnasco]

If the credit cards are paid off every month, then what do I use to calculate by back-end? what amount? $0? Confused about that....

[@MrMagnasco]

Nevermind... just answered my question at 11:55

[@JenniferBeeston]

:)

[@peterthon4010]

DTI limit for FTHB is 50% right?

[@JenniferBeeston]

Depends on loan program. If you were looking at a conventional loan sometimes we can get the backend up to right below 50 but for conventional you need to be below 50% whether your first time homebuyer or not. VA and FHA you can go higher on the back end ratio.

[@mrdrewlash24]

I need help with all of it plz

[@JenniferBeeston]

Grab a spot on the calendar and Sandy and Alyssa or myself will answer all your questions and help you figure it out so that we can put together a game. Plan to get you home ❤️🏡 calendly.com/jennifer-beeston/preapproval-q-a

[@malakiyahamari8448]

Jennifer I don't care about what you're talking about. I just wanted to say you're absolutely gorgeous 😍

[@JenniferBeeston]

Thank you!

[@Blackinterceptor999]

I might not make a lot of money but for me my DTI is 0 Whatever I have I have paid outright for, same for my wife, and even though she is stubborn we have gone through our finances and cut the things we don't "need"

[@deejay5820]

Do you work with real estate investors?

[@JenniferBeeston]

People who want to buy rental properties? Yes but not commercial.

[@Peter_Wang]

Jennifer isn’t a Dave Ramsey fan girl 😂

[@JenniferBeeston]

Yeah his math isn’t mathing these days

[@HK00088]

I don’t know what you’re talking about but you’re so beautiful 🌹 😘

[@joeparga1070]

Would a student loan I’ve co signed on be factored into my dti, I have no financial connection to the payments

[@janejones2439]

A cosigner works as though you applied for the student loan. So that balance will be calculated into your debt.

[@michaelleahy6848]

If you can get the loan terms refied even while remaining the cosigner, at least it could lower the payment and help the DTI. Just be mindful of doing a new loan close to applying for a home

[@JenniferBeeston]

Michael and Jane gave really solid advice and are accurate . People are always shocked when they realize that we hit them with the debt of a cosigned loan. If you can show the person you cosigned for has been making payments for over 12 months then sometimes we can exclude it but they have to have been making it for at least 12 months from an account that you are not on.

[@2short1968]

Working on my credit...👍Thank You for all your videos. "Pops"#truschoolsports🥊🥊