Am I calculating DTI properly?

Am I calculating DTI properly?Am I calculating DTI properly?
linaitame asked 4 years ago
Can you guys tell me if I’m calculating / thinking of this properly? Not considering scores or anything, I just want to make sure my understanding of DTI is correct. For “home payment” I do understand that it’s mortgage, tax, insurance, etc. And obviously I know it’s all contingent on credit scores, etc. Again, just want to make sure I understand what the calculations mean.
 
MONTHLY GROSS INCOME: $ 9,021
 
  • 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?

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