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Once Current House is Pending, Do Not Need to Count Payment In DTI

We discussed several options yesterday for borrowers who want to buy new homes before selling their current home. Debt ratios are often an issue b/c borrowers will have two mortgage/housing payments when they buy a new house.

What most people don’t know, however, is that many lenders will NOT count the current residence’s housing payment against debt ratios, once a property is pending with all contingencies released.

Lenders will of course want proof of this (written contracts and addenda).

The other way to mitigate debt ratios is to find a renter for the departing residence and use the rent for income. This only works, however, if there is a 30% equity cushion (25% for FHA). Lenders will not use future rents if the equity cushion is less than 30% (or 25% for FHA).

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 335646