The debt-to-income ratio (DTI) is expressed as a percentage and is your total “minimum” monthly debt divided by the gross monthly income. The Top DTI ratio will reflect the primary housing debt divided by the gross monthly income. The Bottom DTI ratio will reflect all debts including the primary housing debt divided by the gross monthly income.
There are many fields that can affect a loan’s DTI ratio. Below is a list for reference.
Borrower Information Screen:
Loan Summary
• Note Rate
• Term/Due
• Loan amount
• Check property type – The type of property that is chosen can affect the DTI.
Primary, Secondary, Investment
Proposed Monthly Payment for Property
• Any of the added monthly payments for the subject property will change the file’s DTI
Loan Application -Section 1
1b. Employment/Self Employment and Income
• Any income entered into the employment section will adjust the file’s DTI
1e. Income from other Sources
• Any income entered into the Other Sources section will adjust the file’s DTI
Loan Application -Section 2&3
2c. Liabilities – Credit Cards, Other Debts, and Leases that You Owe
• Any debts entered into the Liabilities section will adjust the file’s DTI
Note: Mortgages liabilities will not count in this area. They need to be added to Section 3a Property You Own
2d. Other Liabilities
• Any debts entered into the Other Liabilities section will adjust the file’s DTI
3a. Property You Own 3b/3c Additional Property
• Real Estate Owned entered into this section will adjust the file’s DTI.
Note: All Real Estate Owned entries MUST be matched to their liabilities in 2c to correctly calculate the Net Rental Income.
Loan Application -Section 4
Rental Income on the Property You Want to Purchase
• Income entered into this section will adjust the file’s DTI.
Note: Will NOT work with a Primary Property selected. If needing to add rental income it will need to be added in section 1e Other Income as “Accessory Unit Income” or “Net Rental Income”. Scenario: Borrower is purchasing a duplex where the borrower will be living in one side and renting out the other side for income.
Truth-in-Lending (Reg. Z)
Qual Rate
• If the loan has a Qual Rate entered the DTI will calculate off of that rate and not the Note Rate
Interest Only months
• If an interest only number of months is entered and the checkbox is checked to Calculate Qual Ratios at the Interest Only Payment, then the loan’s DTI will adjust
Refinance Scenario
Borrower Information Screen
Loan Summary
• Loan Purpose-Verify that the Refinance box is checked as well as the type of Refinance
Loan Application-Section 2&3
2c. Liabilities – Credit Cards, Other Debts, and Leases that You Owe
• Any debts being paid off in the loan will need to be marked in the Liabilities section and will adjust the file’s DTI
