twotall88 t1_iuhosmq wrote on October 31, 2022 at 12:40 PM

Underwriters at banks don't care about agreements or situations, they just look at the facts of your financial situation in a very black and white manner.

You and your brother are equally liable for the $1,000 payment in whole. Your Debt-to-Income will include the entire $1,000 payment to the mortgage as well as your fiancé's $800 payment (I have to assume you're not including escrow in these numbers, you should be).

The banks will just take the total of you and your fiancé's combined monthly debt payments and divide it by the sum of both of your gross monthly income (averaged over the last two-three months as well as the last 2 years of tax returns). They also don't care if you plan to rent the houses out unless you have 2 years of rental income for the property included in your federal tax return.

wiillrus OP t1_iuhts3s wrote on October 31, 2022 at 1:23 PM

Understood. Those figures do, however, include the escrow as well. Is there a general rule of thumb for DTI threshold? Online searches yield results ranging from 30-40% with 50% as the cutoff in special circumstances. Using a calculator, I’m coming out at 25% or less. The 25% is including my full mortgage amount and student loan payments until they’re formally forgiven.

twotall88 t1_iuhwllv wrote on October 31, 2022 at 1:45 PM

It just impacts the rate they are willing to offer you until their individual cutoff that could range between 30-50% depending on your situation and the type of loan you're trying to get.

For example, to get an FHA loan with federal guidelines you have to have 31% or less DTI before the loan (front-end DTI) and 43% or less DTI after the loan (back-end DTI).

For most conventional loans the cutoff is between 45-50% depending on credit worthiness (you can go above this amount if you have really good credit, like near perfect).