This is a great video. I wish it's a law that lenders explain DTI and mortgage to first time home buyers. My partner and I knew we wanted to purchase a small apartment on the lower end of price in our area. We don't care for fancy zip codes or new luxury builds, which we could afford. Our lender tried to convince us to get something nicer or bigger since our DTI was very low. My question is, how come taxes are not taken out from wages and salaries when calculating DTI?
I wish it was a law too! DTI was not something I understood when buying my first house but would have been extremely useful. Lenders look at your gross income (pre-tax) because it allows them to qualify you for more. The higher value home you buy, the more money the lender can make on the loan. That’s why I teach that’s it’s so important to personally understand your budget and how much you will be comfortable with monthly! ☺️
Why in the world do they use gross income. It means nothing if you are taxed differently depending on the area and your take home could be vastly different.
I agree with you 100%! I think they use it because it’s universal but it doesn’t make a ton of sense and can allow you to be approved for more than you realistically can handle
Grateful to have found your videos, the information you've given has enabled me to move forward with a much clearer understanding of the nuances involved in the process of buying a home. Thank you Nicole , you made my day !!!
@@NicoleNark But I do have a question. I'm working with a realtor agent that is a sister in law to a good friend of mines. She recommended a lender to me that she's worked with before. I've heard good things about this lender from multiple people. Is it a good idea to go with the lender your realtor suggest to you?
@@darealist4290 it can be! My biggest advice is do your own due diligence. Don’t feel like you HAVE to work with the lender recommended by your agent because frankly you are the one who is going to be responsible for the payment at the end of the day!
I'm in the process of being pre-approved for a loan and I was wondering how to figure how much I should ask on my application. This video is a life saver. Thanks so much! I've learned a lot.
This information is Gold. Thank you do very much for taking the time to share and explain all this so well in a simple way taking also that Zillow example. Thanks again. God bless you 🙏
I just did my DTI and it was 26% tbh I’m very frugal with my money I refuse to spend unnecessarily and I’ve been saving like crazy because you’ll never know when a rain day comes Avoiding student loans was a blessing, no I didn’t go to college I used to regret that choice but seeing how my friends who went are struggling to pay those off it makes me breathe a major sigh of relief that I chose a different route Also no credit card debt I only use those for the smallest of things like gas station food 😂 don’t judge me I know it’s gross
I use my credit card 10%at monthly, don't have payment car,I don't have student loan,I pay bills, rent ,car insurance, I have 5 chid,I going supermarket every week cost $232:00,268:00,and309:00.
What about household who makes $500k/year and having $20k house payment? That leave them with $20k for everything else. It really depends on income. And it doesn’t mean it’s smart thing to do.
@pawelek7 yeah that household could. But when i make a small comment like this, it's really just meant to be expressive of the fact that most ppl i know don't make even 100k. It's not an exhaustive critique of the original video cause I'm not going to spend the extra time specifying that technically there ARE ppl that can do it, when this video is going to reach the average person.. whom definitely doesn't earn 500k a year even combined. That's a pretty rare situation considering youtube financial advice is usually going to be catered for the biggest group of people possible.. least I would hope so if they wanna get a lot of views.
Hi Nicole, thanks for the good information to educating us. would you please explain how to calculate the income for the self employed from the tax return. when the clients have w2 and self-employed.
Hi Nicole! Could you please make a video for people who are freelancers/ contract based workers that want to buy a home and any tips you may have for them? Thank You!!
Sounds like I'll be in great shape in because my salary is 70 five,. No student loans,no car note ,but I do have medical bills and child support on my credit report. Seeing. As they dont count the balances THATS GREAT!
@NicoleNark your videos are very educational. My concern is in the high price of the properties at this moment. But every bit of information helps. Your content is great, and you have answered most of my questions with it. Howdy and thanks From Texas !!
What about the fact that everyone student loans have been frozen since 2018 especially in NC after we had a natural disaster (hurricane) that left people living in FEMA RVs and hotels
Sorry but we had a 740 credit score and gross income 150,000. But because of the Writeoffs they stated we didn't make enough. So they don't look at gross they look at net.
They look at gross income for w2 employees. If you have a business or are self employed it will be net income and they may require multiple years of tax returns to review
Thank you very much for this video. It was very helpful 🙂. I have a question. So, will the mortgage company always go by the max .43 or will the go by your current DTI ratios. In this video the couple dti was 26%. Thanks again for your help.
Nicole, when dealing with DTI what if I have delinquent student loans and a delinquent cc on my credit? Are they still factored into the DTI? Other those I don’t have any current debts.
@nicolenark love the information thank you for taking the time to make this video for us all ☺️ I’m in the process of getting a FHA mortgage working on DTI jw would 41.36% DTI still qualify me getting a loan?
Chargeoffs and collections aren’t usually factored into the DTI calculation. Depending on the amounts and the lender, the lender may try and have you pay some of the balance.
that has never made sense to me. higher interest means higher payment, and if a high dti meaning lower likelihood of being able to make your payment, resulting in higher interest means a higher payment and higher dti. i had this argument when want to buy a new truck once, they tried to tell me i didn't make enough money for the new truck but i did to buy a used one that would have had more interest from being used which actually was a significantly high monthly payment...but it is what they want it to be i guess
Thanks for sharing your knowledge. I have a question about credit card payment. If groceries, phone bill, Internet bill are not included in credit card minimum payments, what are the credit card payment need to count for?
Your typical living expenses like utilities, phone bill etc are not part of the calculation. If you are carrying a balance on your credit card and do not pay them off in full each month, you will have a minimum payment that you are required to make. Those minimum payments are part of the DTI calculation. If you pay your credit card off monthly, your balance should be $0 and there’s no need to add it to the calculation. Hope that helps!
For credit cards, what about cards with no balance on them? I have 5 cards and 3 of them have no balance or have a balance that is less than the monthly payment. How would those be calculated in?
Hi Mam! I have a question. I am gonna graduate this fall 2023 and I have already got a full time offer. I am getting a salary of around 80000 annually. Previous year, I have done 2 internship 3 months each and I have done one internship this year for 5 months. I wanted to know can I get loan if I don’t have 2 years of work experience? Can a student buy a house if he just graduated.
It sounds like you should have a sufficient amount of work history in order to qualify! I did something very similar as a college graduate and was able to buy my first home just entering the workforce!
My DTI is 47% because of school loans that are currently deferred. should i take them out of deferment to be considered a lower monthly payment and lower DTI.. right now 5% is about 2,100 a month.
It seems like getting on an income based repayment plan with a lower monthly payment would be a good idea if you plan on trying to buy a home in the near future!
I’m currently studying for MLO exam. And sometime they tell me the total credit card debt then they ask me to calculate total debt to income. Are there any formula to calculate minimum credit card debt?
With rent going up in my area I feel it would be cheaper to pay a mortgage. I don’t have student loan debt but have a looming medical bill. Do you know if lenders use medical debt in loan calculations? Using your calculations without it my DTI is 23%.
If I own a paid for home do I need to reveal insurance, taxes, and HOA for that property? Note: it's a rental and the income is reported on my tax return.
South florida is so messed up rn 🙃. Our average HOA’s (unless you live in “section 8” condos) are anywhere from 600-900/month. Add onto that our insurance costs and low wages, and its absolutely insane how anyone can afford to live here unless they’re millionaires. Im 27, make 75k/year and have 0 debts. I cannot afford anything down here. Its so sad being priced out of the place where I grew up 😞
Is there any community in your area that doesn’t have an HOA? That’s honestly really messed up that they’re charging such a high amount in HOAs This is exactly why I will steer clear from any neighborhood that has an HOA, no thank you
Question. I have a corp from 2005 but shelved it because of life and military so it was dormant. But i started back a few months ago and make money. Will they cpunt that as income?
Great question! Wages are typically hourly pay. With wages, your paychecks can differ depending on how many hours you work during your pay period. Salary is a fixed amount for the year.
I work an hourly wage job. My wife and son receive disability. Would it be beneficial to add their income applying for a loan or just use my icome? Which is above 65k.
Your video is very helpful. Thank you! However, what if your student loan is under the forgiveness process w/ $0 monthly payment, would that percentage calculation still apply? Thx
If student loans are deferred but I still have been making my own monthly payments, would that count as the specific amount Ive been paying or a percentage depending on loan type?
If you set up a standard, extended, graduated, income-based or other type of repayment plan with your student loan servicer and have been making the payments on that plan, lenders will likely be able to use that payment amount. If you have been making random payments that aren't on any type of planned repayment schedule, than they will use a percentage.
This is a great video. I wish it's a law that lenders explain DTI and mortgage to first time home buyers. My partner and I knew we wanted to purchase a small apartment on the lower end of price in our area. We don't care for fancy zip codes or new luxury builds, which we could afford. Our lender tried to convince us to get something nicer or bigger since our DTI was very low. My question is, how come taxes are not taken out from wages and salaries when calculating DTI?
I wish it was a law too! DTI was not something I understood when buying my first house but would have been extremely useful. Lenders look at your gross income (pre-tax) because it allows them to qualify you for more. The higher value home you buy, the more money the lender can make on the loan. That’s why I teach that’s it’s so important to personally understand your budget and how much you will be comfortable with monthly! ☺️
I usually don’t comment on videos but you are literally the best! Thank you so much
You are so welcome! I appreciate that
Your explanation of minute details and your handwriting are both amazing. Thanks
Thank you so much! ☺️
This was great, thank you! Very educational and easy to understand.
Yay! I’m happy to hear it!
Why in the world do they use gross income. It means nothing if you are taxed differently depending on the area and your take home could be vastly different.
I agree with you 100%! I think they use it because it’s universal but it doesn’t make a ton of sense and can allow you to be approved for more than you realistically can handle
Well done on single to Dual salary. Keep these up. I like the pillow example at the end.
Thank you, I appreciate that! ☺️
Grateful to have found your videos, the information you've given has enabled me to move forward with a much clearer understanding of the nuances involved in the process of buying a home. Thank you Nicole , you made my day !!!
I'm so happy to hear it! You made MY day 😊
Excellent information. Just easy and simple breakdown. Thank you so much😊💯
Happy to hear you found it helpful, Kelvin! Thanks for watching ☺️
This is exactly how I thought it worked but wanted detailed confirmation. Thanks so much for this well done video.
You are so welcome! I’m happy to hear it was helpful ☺️
Great content with examples and straight to the point!! Excellent!
Thank you for watching! I’m glad it was helpful ☺️
This is the best explanation on the internet
Thank you so much!!
This was amazing
Love this 🎯💯🖤
This was so helpful. I'm glad I found your channel
I'm so glad! 😄
@@NicoleNark But I do have a question. I'm working with a realtor agent that is a sister in law to a good friend of mines. She recommended a lender to me that she's worked with before. I've heard good things about this lender from multiple people. Is it a good idea to go with the lender your realtor suggest to you?
@@darealist4290 it can be! My biggest advice is do your own due diligence. Don’t feel like you HAVE to work with the lender recommended by your agent because frankly you are the one who is going to be responsible for the payment at the end of the day!
I wish you were in Tennessee. You have a heart of a teacher. I enjoyed this video. Very informative.
Thank you for the kind words! I have some great connections in Tennessee so if you ever need some help, don’t hesitate to reach out ☺️
I'm in the process of being pre-approved for a loan and I was wondering how to figure how much I should ask on my application. This video is a life saver. Thanks so much! I've learned a lot.
I’m so glad you found it helpful! ☺️
Thanks again Nicole!! This is what I need right at this moment!
You're so welcome!
Finally, I can figure the real math! Thank you so much!
So happy to help!! ☺️
This information is Gold. Thank you do very much for taking the time to share and explain all this so well in a simple way taking also that Zillow example. Thanks again. God bless you 🙏
I’m happy to help and so glad you found it useful! ☺️
thank you, this was very informative and educational.
Happy to help ☺️
I just did my DTI and it was 26% tbh I’m very frugal with my money I refuse to spend unnecessarily and I’ve been saving like crazy because you’ll never know when a rain day comes
Avoiding student loans was a blessing, no I didn’t go to college I used to regret that choice but seeing how my friends who went are struggling to pay those off it makes me breathe a major sigh of relief that I chose a different route
Also no credit card debt I only use those for the smallest of things like gas station food 😂 don’t judge me I know it’s gross
That’s awesome!
You're awesome!! Thanks for the explanation.
I use my credit card 10%at monthly, don't have payment car,I don't have student loan,I pay bills, rent ,car insurance, I have 5 chid,I going supermarket every week cost $232:00,268:00,and309:00.
Soooooo question! Is it better to put money into savings for a bigger down payment OR is it better to try to pay down debt?
lol could anyone afford a house at 40% debt/ income ratio when we also have to pay utilities, groceries, maintenance etc..
What about household who makes $500k/year and having $20k house payment? That leave them with $20k for everything else. It really depends on income. And it doesn’t mean it’s smart thing to do.
@pawelek7 yeah that household could. But when i make a small comment like this, it's really just meant to be expressive of the fact that most ppl i know don't make even 100k. It's not an exhaustive critique of the original video cause I'm not going to spend the extra time specifying that technically there ARE ppl that can do it, when this video is going to reach the average person.. whom definitely doesn't earn 500k a year even combined.
That's a pretty rare situation considering youtube financial advice is usually going to be catered for the biggest group of people possible.. least I would hope so if they wanna get a lot of views.
My dti is 19.83% and I still can't afford the house I need! I'm a single parent of 2.
I’m gonna watch all your videos. So nicely explained! Thank you ❤
Thank you so much for the kind words! I’m happy to hear you find my videos helpful ☺️
Hi Nicole, thanks for the good information to educating us. would you please explain how to calculate the income for the self employed from the tax return. when the clients have w2 and self-employed.
Hi Nicole! Could you please make a video for people who are freelancers/ contract based workers that want to buy a home and any tips you may have for them? Thank You!!
Excellent video. Gained a follower ✊🏽
Awesome, thank you!
Sounds like I'll be in great shape in because my salary is 70 five,.
No student loans,no car note ,but I do have medical bills and child support on my credit report. Seeing. As they dont count the balances THATS GREAT!
Ty for information. Verified that I’m screwed for a couple years :/
You have to understand so that you can properly plan! Now that you know, you can work towards improving your DTI for your future 😊
Excellent information! From a very appreciative new subscriber to your channel. Thank you very much!
Glad it was helpful! Thanks for subscribing 😊
This video was amazing thank you for sharing such valuable information. 💜
You are so welcome! Glad it was helpful ☺️
Thank you so much Nicole! Watching this video helped a lot!!
Glad it was helpful!
This was super helpful, loved the examples!
Glad you liked it!!
Great, great info!!! 👍🏼
Glad you found it helpful! 😄
@NicoleNark your videos are very educational. My concern is in the high price of the properties at this moment. But every bit of information helps. Your content is great, and you have answered most of my questions with it.
Howdy and thanks From Texas !!
Thank you, Nicole, this was extremely helpful!
You're so welcome!
That was an amazing explanation!!!!! Than you !!!
You are so welcome! Glad you found it helpful ☺️
Nicole your videos are so educational!!! Thank you so much for having the time to share your knowledge to others 🫶
You are so welcome! I’m happy to help ☺️
Don't you have to calculate in what you are currently paying for rent/mortgage?
Not if that payment will stop when you purchase!
Great video and explanation!
What about the fact that everyone student loans have been frozen since 2018 especially in NC after we had a natural disaster (hurricane) that left people living in FEMA RVs and hotels
Another helpful video. Thanks.
Glad it was helpful!
Income source-can they include foster care payments
Great video and so helpful thank you so much
Glad it was helpful!
Sorry but we had a 740 credit score and gross income 150,000. But because of the Writeoffs they stated we didn't make enough. So they don't look at gross they look at net.
They look at gross income for w2 employees. If you have a business or are self employed it will be net income and they may require multiple years of tax returns to review
incredible information!
Glad it was helpful! ☺️
Thank you for making this video
My pleasure!
Thank you very much for this video. It was very helpful 🙂. I have a question. So, will the mortgage company always go by the max .43 or will the go by your current DTI ratios. In this video the couple dti was 26%. Thanks again for your help.
They will allow you to go to the max.
Thank you, you were very helpful 🙂
Glad it helped! 😊
Thank you much very informative
Glad it was helpful! ☺️
Nicole, when dealing with DTI what if I have delinquent student loans and a delinquent cc on my credit? Are they still factored into the DTI? Other those I don’t have any current debts.
@nicolenark love the information thank you for taking the time to make this video for us all ☺️ I’m in the process of getting a FHA mortgage working on DTI jw would 41.36% DTI still qualify me getting a loan?
Very informative!
Thank u Nicole!!!
Great video.
This is great!
Glad you think so!
Would a 41k loan be part of DTI since client pays a monthly payment?
Yes, the monthly payment would be to be included!
@@NicoleNark thank you for replying 🤝
SO helpful!
Glad you think so! ☺️
What about dispability pay for veterans as it doesnt count as income for the DTI?
Yes it does
Great information ❤
Thanks! Glad it was helpful!
Great video thank you what if you have chargeoffs on your credit report?
Chargeoffs and collections aren’t usually factored into the DTI calculation. Depending on the amounts and the lender, the lender may try and have you pay some of the balance.
What if student loan is in forbearance?
that has never made sense to me. higher interest means higher payment, and if a high dti meaning lower likelihood of being able to make your payment, resulting in higher interest means a higher payment and higher dti. i had this argument when want to buy a new truck once, they tried to tell me i didn't make enough money for the new truck but i did to buy a used one that would have had more interest from being used which actually was a significantly high monthly payment...but it is what they want it to be i guess
Thanks for sharing your knowledge.
I have a question about credit card payment. If groceries, phone bill, Internet bill are not included in credit card minimum payments, what are the credit card payment need to count for?
Your typical living expenses like utilities, phone bill etc are not part of the calculation. If you are carrying a balance on your credit card and do not pay them off in full each month, you will have a minimum payment that you are required to make. Those minimum payments are part of the DTI calculation. If you pay your credit card off monthly, your balance should be $0 and there’s no need to add it to the calculation. Hope that helps!
For credit cards, what about cards with no balance on them? I have 5 cards and 3 of them have no balance or have a balance that is less than the monthly payment. How would those be calculated in?
Great question, No balance = $0 added to the calculation!
Thank you for this. This video was well explained. Isn’t FHA threshold today Max 57%?
Technically the max is 57%, yes! Lenders can impose their own restrictions so make sure to ask the lender you are thinking of working with!
Hi Mam! I have a question. I am gonna graduate this fall 2023 and I have already got a full time offer. I am getting a salary of around 80000 annually. Previous year, I have done 2 internship 3 months each and I have done one internship this year for 5 months. I wanted to know can I get loan if I don’t have 2 years of work experience? Can a student buy a house if he just graduated.
It sounds like you should have a sufficient amount of work history in order to qualify! I did something very similar as a college graduate and was able to buy my first home just entering the workforce!
The thought of someone buying out of college on 80k is terrifying. I hope you have alot of cash otherwise please reconsider
Is the USDA loan rate permanent or changes like the rest
My DTI is 47% because of school loans that are currently deferred. should i take them out of deferment to be considered a lower monthly payment and lower DTI.. right now 5% is about 2,100 a month.
It seems like getting on an income based repayment plan with a lower monthly payment would be a good idea if you plan on trying to buy a home in the near future!
I’m currently studying for MLO exam. And sometime they tell me the total credit card debt then they ask me to calculate total debt to income. Are there any formula to calculate minimum credit card debt?
With rent going up in my area I feel it would be cheaper to pay a mortgage. I don’t have student loan debt but have a looming medical bill. Do you know if lenders use medical debt in loan calculations? Using your calculations without it my DTI is 23%.
Lenders will not factor the medical bill into your DTI! Sounds like you might be in a good place to buy a house!
If I own a paid for home do I need to reveal insurance, taxes, and HOA for that property? Note: it's a rental and the income is reported on my tax return.
I doubt that you would be asked for that info!
@@NicoleNark so don't ask don't tell. Got it.
South florida is so messed up rn 🙃.
Our average HOA’s (unless you live in “section 8” condos) are anywhere from 600-900/month.
Add onto that our insurance costs and low wages, and its absolutely insane how anyone can afford to live here unless they’re millionaires.
Im 27, make 75k/year and have 0 debts. I cannot afford anything down here. Its so sad being priced out of the place where I grew up 😞
@Jimbob where are you in South Florida?
@@amyevans1682 Yes. Fort lauderdale
Is there any community in your area that doesn’t have an HOA? That’s honestly really messed up that they’re charging such a high amount in HOAs
This is exactly why I will steer clear from any neighborhood that has an HOA, no thank you
Question. I have a corp from 2005 but shelved it because of life and military so it was dormant. But i started back a few months ago and make money. Will they cpunt that as income?
Hello! I co-sign my wife’s car, so do I add it once on her portion or do I count it twice???
Great question! Count it just once
Great info. But for a Scandinavian, what is the difference between wages and salary? :P
Great question! Wages are typically hourly pay. With wages, your paychecks can differ depending on how many hours you work during your pay period. Salary is a fixed amount for the year.
@@NicoleNark Here in Denmark salary and wages are the same thing. But thx for the explanation. It will help once i move to the states.
I work an hourly wage job. My wife and son receive disability. Would it be beneficial to add their income applying for a loan or just use my icome? Which is above 65k.
It could definitely be helpful to add their income as it will increase your overall pre-approval amount
Do you always have to add in any of the three loans you mentioned?
Not if you aren’t going to get a loan!
18:20 I saw this with my florida eyes at first and wondered why she brought up a million dollar home lmao (that's what that's "worth" here)
Wow! What part of Florida?
@@NicoleNark Davie/Cooper city/Hollywood
Nicole, does 401k count towards income source?
Not typically towards income sources. If you were to use funds from your 401k towards your purchase it would likely be part of your downpayment
Gotcha. Perfect. Thank you.
Your video is very helpful. Thank you! However, what if your student loan is under the forgiveness process w/ $0 monthly payment, would that percentage calculation still apply? Thx
Happy to hear the video is helpful! Just to clarify, is the student loan being forgiven or is it in deferment?
@NicoleNark. Forgiven.
If student loans are deferred but I still have been making my own monthly payments, would that count as the specific amount Ive been paying or a percentage depending on loan type?
If you set up a standard, extended, graduated, income-based or other type of repayment plan with your student loan servicer and have been making the payments on that plan, lenders will likely be able to use that payment amount. If you have been making random payments that aren't on any type of planned repayment schedule, than they will use a percentage.
I have only 1car.
Makes no sense, higher DTI higher risk yet they are willing to rip you off on higher interest more than if you were not struggling with debt
I know you’d think they’d help you out lol but really it’s just you’re a riskier bet so they want to be compensated more for taking on the risk.
What do you have against trucks 😂😂
Haha I tried to hide my saltiness 😂 I may or may not have a guy in my life with an $800 truck payment!
I thought child support was for the child. Lazy women!
Child support is for the child, but obviously paid to the guardian. Receiving child support is no indication that a woman or any guardian is lazy.
Great video
Thanks!