What is it?
This program provides the lender with incentives to reduce the current mortgage payment to 38% Front-End DTI (DTI is Debt-to-Income ratio). In plain English that means that the sum of all mortgage expenses, such as payment, property taxes, insurance and so forth, must be reduced to 38% of current pre-tax income. For example, pre-tax income is $3,000. Maximum DTI allowed to qualify is $1,140, which is 38% of income. The lender must reduce the mortgage portion of DTI to a number that when combined with the property insurance, property taxes and other related mortgage expenses, does not exceed $1,140.
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