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!