DTI Explained?

[galaxyrods]

If a well qualified buyer has a Debt To Income Ratio of lets say 33% then that means that person is clearing 66%(+-) positive cash flow per month.

As explained to me: your DTI is based on what you owe creditors that shows up on your credit report....(example mortgage loans, vehicle loans, credit cards, alimony...etc ) and those payments cant exceed 33% (+-) of your income. Is this correct?

Then if so....a person qualifying for this loan pockets 66% of there income.


Here's how I see it

Example:
1st Mortgage $1500
Car payment $400
Credit cards $200
Boat loan $400

Total = $2500 month

If this person takes home $7500 per month then their DTI is 33% (+-) (not doing exact math...lol).

$7500 x 12 months (1 year) = $90,000.

So this person HAS TO make $90,000 per year to only spend $2500 per month on bills.

I CALL BS ...lol. In order to qualify for a bank loan you need to pocket 66% of your income? Someone Explain!

My neighbor works at Wal-mart and his wife works at a grocery store and just bought a house. He told me they are lucky to clear $60,000 and his monthly bills are way over $2,500 a month. HOW DID HE GET A LOAN???

Can someone explain this to me...his DTI is like 60%. American's are not pocketing 66% of their income per month. I wish we did...then America would be great again!

The lending rules don't make sense too me...please help!

I'm an Idiot I guess!

[reclending.com]

At quick look the math seems fine. Not real sure where the 33% figure you used comes from. Most lenders we work with will go 40% of gross. A person making a $1,500 mortgage payment generally will be in that income area you mention.
- Also, if two people are on the loan, both incomes count against the monthly out.
- Toy loan debt to income ratio can be different then for a home or car.
- Lenders figure you need a car to get to work and a house puts a roof over your head.
- There are several Gov programs for home loans that help people with ownership.
- There is manufacturer financing for auto loans that help with car loans - they have factories to run and keep busy.
Not really an exact science but some basic principles do apply.
Let me know if I can help.
Thank you,
Ken

[Gill_Taps]

Bottom line is the credit "industry" has become so tainted and corrupt, it literally depends on who is looking at your application. And if you're willing to take it deep on interest rates.

[reclending.com]

Bureau scores generally do not match up. Something like DTI is more clear cut. The bureau normally shows the "out" and the provable income is the "in". Simple division will show what the DTI percentage is. Not much interpretation or margin for error on that part of an approval.
Also, someone at $50,000 a year has a narrower margin then $150,000 a year. Banks make money having loans paid back. That means they need to lend to have the loan in the first place. I am not a fan of the system but having good credit always helps increase the options.
Let us know how we can help.
Thank you,
Ken

[Gill_Taps]

I was just talking about the "system" with a DOD investigator who does clearance level investigations. He mentioned it's a complete headache because it's completely unregulated, and the bureaus don't like to do their job for the most part.