How to Automatically Increase your Mortgage Qualification with a USDA Financing Debt Ratio Waiver!
How do you automatically increase your mortgage qualification with a USDA Financing Debt Ratio Waiver in Florida, Texas, Tennessee, and Alabama?
Has a lender denied you because your USDA debt-to-income ratios are too high? What happens if your qualifying budget needs a little boost to purchase a home with USDA financing in Florida, Texas, Tennessee, or Alabama?
In these situations, a USDA Debt Ratio Waiver can help, and in today’s video, I’ll explain the factors needed in order to increase your USDA financing and qualifying ability.
And don’t forget, we are known for keeping Realtors and homebuyers updated through each step of the process from pre-qualification to closing along with one easy point of contact.
How can a USDA Debt Ratio Waiver increase your sales price?
As a starting point, your debt-to-income ratios (debt ratios) are calculated by dividing your new mortgage payment (housing expense) against your monthly gross income and also by dividing your total monthly debt payments by that same income.
Now, the housing portion of your debt ratios are referred to as your PITI payment and include monthly amounts for items such as your principal and interest, taxes, insurance, etc., while your total debt ratio consists of that housing expense plus additional monthly debt such as any auto loans, credit cards, or student loan payments.
Also, USDA published guidelines allow 29% for housing and 41% for your total expenses (29/41), but expanded ratios of up to 32% for housing and 44% for total (32/44) are available provided that:
The qualifying credit score of all applicant(s) is 680 or greater, and one of the following compensating factors is identified on a purchase transaction:
- Accumulated savings or reserves available post-closing which are equal to or greater than three months of PITI payments. Mortgage reserves are those funds that are available after closing and documentation options may include a verification of deposit (VOD), bank statements, 401K statement, or other eligible source. Remember that cash on hand is not eligible for consideration as a compensating factor.
- If all employed applicants have been continuously employed with their current primary employer for a minimum of 2 years.
- Applicants who have received Social Security benefits or retirement income for two years may utilize this compensating factor with supporting documentation.
- However, this does not apply for self-employed applicants.
Additionally, because Debt Ratio Waivers are applicable with manually underwritten loans, make sure your lender is able to work with USDA manual underwriting guidelines for those files that do not receive a GUS Accept.
In summary, don’t get pulled into the weeds on the details, just understand that by having at least a 680 score plus one of the factors we discussed today, this can provide for an immediate boost to your qualifying ability. Remember to make sure you are working with a USDA Approved Lender such as Metroplex Mortgage Services who truly understands how to maximize your USDA loan eligibility.
We realize USDA qualifying guidelines can be complicated, but that is where we step in to help. My team is built to help walk homebuyers through the USDA process step by step.
Just simply call or email to discuss your scenario, schedule a convenient callback time, or complete our 1-2-3 online pre-qualifier to get started.
I want everyone to make it a great day, and look forward to seeing you right here for the next tip of the week!