- FE DTI limit (0.31) = $ 2,796 –> this is the absolute maximum amount of monthly home payment I could qualify for
- BE DTI limit (0.43) = $ 3,879 –> this is the absolute maximum amount of monthly total payments I can be obligated to, which includes revolving debt, installment loans, and the hypothetical new monthly home payment
- Current BE DTI calculation: BE DTI limit = monthly obligations + home payment
- Current BE DTI calculation: $ 3,879 = $ 1,643 + (x) home payment
- (x) = $ 3,879 – $ 1,643 = $ 2,236 for home payment
So if I take the BE DTI limit of $ 3,879 and subtract my current monthly obligations (cards & loans), that’s the *actual* current maximum home payment I could qualify for, based on my current debt obligations. So in my example, I could technically qualify for a home where the payments do not exceed $ 2,796 (FE DTI), but due to my current debt obligations, I can only really truly qualify for a home payment of $ 2,236 max.
Is that right?