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My husband and I applied for an FHA loan on a foreclosed home. The Home was a great price and the house payment was only going to be around 500 to 530 a month. That Included the taxes. Just wondering how they figured we couldn’t afford the house?? They said our debt-to-income ratio was to high. I don’t work right now, but I do draw a small check each month, but my hubby makes around 2800 a month and the only “debt” we have is a car payment, 400 a month and 2 credit cards which is $ 50 a month. How is that to much debt? Can someone please explain this to me cause I am confused. The only other bills we have are just normal bills like power, phone etc and we all ready pay $ 500 a month rent right now which is basically the same as what the house payment would have been. Any advice would be great cause I am very disappointed. 🙁
Also I want to add, they said our credit was good, which it should be we have worked hard on it, paying bills on time etc. Its just the debt-to-income thing.
we have $ 400 in credit card debt…. for 2 cards. Yeah… We do pay them off. Just now thats how much there is…
We are getting taxes back due to be deposited on the 13th and we were gonna use that as the down payment. See, just seems like there is something up.

3 Thoughts on Denied Mortgage Loan because of Debt-to-Income Ratio?
  1. Reply
    Uncommon Sense
    February 8, 2014 at 8:14 am

    You don’t make enough. That’s it.

  2. Reply
    Go with the flow
    February 8, 2014 at 8:14 am

    Pay those credit cards in full each month.
    Why oh why are you carrying credit card balances?
    Don’t you know how much this hurts you?

    57% of Americans pay in full each month (always).
    Statistically they hold those top credit scores.
    Be one of them. Pay them off, then ask again about that home you want.

    How much credit card debt you have in total?
    $ 50 a month could mean $ 4,000 balance on each card !
    And do you have down payment, closing costs, and some taxes and insurance upfront?
    And two months of income left over in savings?
    Those that carry credit card balances rarely have any money in savings.

  3. Reply
    Malcolm
    February 8, 2014 at 8:47 am

    Debt to income ratio is when a loan officer adds up all of your monthly income and they add up all your expenses and divide it into a ratio to determine how much you are bringing in a month and how much you are spending every month. Ok FHA loans were created for people with low credit scores 620, so that everyone who wants a house has one. So what I suggest is that you and your husband sit down look at your expenses and create a budget. Please remember have LOTS OF ASSETS AND LESS LIABILITIES

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