Things To Consider When Your Loan Doesn’t Qualify Due to DTI:

  1. DEBTS: Review debts carefully with your borrower to ensure the credit report is accurate and true. Are there any payments you can omit? Are there any loans that have less than 10 payments (or close, maybe they can prepay them)? Can they payoff something? Trade a car in for a lower payment? Consolidate some debt? Are they an authorized user on any tradeline or a "joint" holder of a debt that the other party pays the bills for? Double check the 1003 to be sure the property taxes, insurance, income is correct.

  2. INCOME: Did you max it out? Hourly / OT / Bonus / Commission? Are they getting a raise soon? Have they had a recent pay increase?

  3. Co-Signer: Never hurts to ask. You can talk to them and let them know that you could possibly refinance them down the road and remove them from that liability.

  4. Rate/Term: Does lowering the rate make a difference? Is there a no PMI program that helps the DTI? Put more money down? Home owners Insurance lowest possible? I have seen the difference of $5.00 added /subtracted to monthly debts make or break a loan. Oddly enough sometimes putting 10% down instead of 15% will get an automated approval due to the higher MI factor(involvement), likewise 5% down instead of 10% etc.

  5. Reduce Sales Price/ Loan Amount: Keep lowering sales price/ loan amount until the loan gets approved. Let your borrowers know that it will work at this sales price if you can’t do any of the above items. I have seen loans go through at 10% down and not 15% (higher MI coverage) also condo's add a element of "risk" so sometimes a 45% DTI will go through for a single family but not for a condo (got burned by that once!)

  6. Co-borrower ? Run ratios with just the borrower or vice versa. If one borrower is burdened with debt and has limited income they could be hurting more than helping to the overall DTI.

Instead of saying “no” you are giving your borrowers options. This helps soften the delivery of bad news and makes it more understandable for them to see where the issues are along with a possible solution. Working hard and being creative is what will set you apart from your competition.

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