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05-22-2009, 08:50 AM #1
Renter
- Join Date
- Aug 2008
- Posts
- 10
Question about DTI
I have a current mortgage and am considering buying a second house to move into. When calculating Front end DTI, do I include my current house payment AND the second house payment? Or does my current house payment count as a debt in the back end ratio? thanks
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05-22-2009, 11:54 AM #2
Fixer Upper
- Join Date
- May 2009
- Posts
- 19
the front end ration is just 31% of your gross income before any deductions.
The current mortgage payment and the back end ratio is where it counts. A good rule of thumb is 41% of grosss minus all recurring monthly obligations - including your current mortgage payment.
This does NOT include utilities, cable, phone, insurance, etc. Pretend you moved to a tent in the woods with no car or house or power. Whichever companies will still want you to pay them are the "monthly recurring obligations".
Whatever money you have left over after doing the back end ratio math is how much you can use for that second home payment.
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05-26-2009, 04:15 AM #3
Condominium
- Join Date
- Sep 2007
- Location
- Indianapolis
- Posts
- 302
This question is definitely more suited for a mortgage broker, but I think rocketfuel is right about the backend being much more important that the front end.
Mike Taylor
Broker/Owner
Red Door Real Estate
Indianapolis Real Estate| Indianapolis Homes | Indianapolis New Homes | Carmel Real Estate | Fishers Real Estate |Noblesville Real Estate | Greenwood Real Estate | Zionsville Real Estate | Westfield Real Estate | My Real Estate Blog
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