Newbie Questions- LTV and DTI

[Jeff W.]

So I have two general confusion on LTV and DTI.

Let's say a home is appraised at $100,000. You agree on a purchase price of $75,000, and put $25,000 down. Is your LTV 75% or 66.6%?

Also, how are lenders about 50% DTI ratios with a 722 credit score for first time buyer these days? Do-able?

[Jon Holdman]

If you're buying using a conventional mortgage, then your LTV in that example is 66.7%. $50K (loan amount) / $75K (value). Value is the lower of the appraised value (which will be determined by the lender's appraiser) or the purchase price. So, really, the two choices in your example are 66.7% or 50%. 50% = $50K loan amount / $100K appraised value.

Speak with some mortgage brokers about your situation. Maybe someone can find you a loan, or use some of the rental income to help qualify you. I don't think 50% DTI's fly for a primary residence purchase these days. Owner financing might be an option, though.