What are the approved DTI ratio's for HAMP guidelines?

by Chris
(S. Chicago)

Great website, thank you! I have found excellent help and information here!

I have been denied by Citi Mortgage for the HAMP program based on too little income.

What is the maximum front end DTI ratio allowed to qualify for the HAMP program? Is it 31%-38%? Also, what range does the back end DTI ratio need to be in?

I meet all the other guidelines listed on your website in order to qualify. As far as gross income, I would like to know "WHERE I NEED TO BE" in order to get approved for this program. Do I need to be at 31% with my income or total household income? I believe rental income plays a role which is $700, but it i.

I own a 2 flat property which is my primary residence. I owe $375,000 with my monthly loan amount of $2952 which includes my PITI. I have a home equity line of credit (like my 2nd mortg)that was taken out with PNC bank. As stated rental income is $700 per month and it is to my understanding that 25% is deducted for vacancy. Any help would be appreciated.

Mortgage Loan Modification Answer:

We're glad you found the information on our site to be helpful. We appreciate your feedback.

For the HAMP loan modification program, the goal is to bring down your front-end DTI (mortgage + property taxes + insurance + HOA dues -- also known as PITIA) to 31-38% of your gross monthly income.

When adding in the rest of your other monthly obligations (car payments, minimum credit card and store card payments, child support and alimony payments, and any other payments that show up on your credit report) to your PITIA, then dividing by your gross income, this gives you your back-end DTI. Lenders generally would like this to be no higher than 55% or so AFTER your loan is modified down to approx 31-38 %.

And yes, 75% of your rental income definitely counts as a source of income so be sure to include it if you need to. If you pay taxes on the rental income, and it's documented on your tax returns, you will have to include it.

Otherwise, use your discretion on whether to include it or not based on your financial worksheet to meet the DTI range that fits the HAMP program both for the front-end and the back-end ratios.

You did not mention your total monthly income, so without that information, I cannot make a full assessment of your situation.

Further Mortgage Loan Modification Guidance:

If you would like to obtain further guidance, I highly recommend No Upfront Fee Loan Modification as the best option to explore first. Read the reasons why.

All the best to you!

-Grace

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