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For instance, if the ratio they use is 28/36, will they turn me down if my back end ratio is 11% or just lower my front end allowance accordingly?
I have credit scores above 800 and the total of my current bills + the new house PITI would only equal 26% of my gross monthly income. But 11% of that would be on the back end of the ratio.
Thanks, SmartMoney. I prefer a conventional (15 yr.), so we don't have to pay PMI, and I'm only shopping at small banks and credit unions. But I'm not sure if we'll have the 20% down in time. If not, I would probably try for NFCU's Homebuyers Choice mortgage. They advertise it as having no PMI, but I believe they're just charging a fee for it up front. NFCU uses a 28/36 ratio, last time I looked.
My back end ratio is actually at 17%, so I'm using a chunk of our savings to pay down the truck loan this week. The amount I spend to pay it down will be about the same as the reduction in reserves I'll be required to have, but it leaves me less for a down payment.
Oh, I just realized I've been figuring my ratio wrong. My total PITI on the new house would be 11% of monthly gross pay and my total bills right now + the new house would be 31%, so if that's correct, and my ratio is 11/31, then I don't need to pay down the truck payment.
I copied down bad advice on which ratio included what, but a google search just straightened me out. Maybe I can make the 20% down payment after all... if they count my rollover IRA as reserves. I can pull it out if necessary.
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I just realized I've been figuring my ratio wrong. My total PITI on the new house would be 11% of monthly gross pay and my total bills right now + the new house would be 31%, so if that's correct, and my ratio is 11/31, then I don't need to pay down the truck payment.
