What's a workable debt to income ratio for a young family?
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Hi. My husband and I just purchased our first house. Our total debt to income ratio is 35% of his gross monthly salary (26% housing, including taxes and insurance, 9% student loans; we have no credit card debt). I felt good about this, on the assumption that I would soon be going back to work as well, only to find out that I am unexpectedly pregnant. That's wonderful news but at this point a bit scary, too. Is this a debt to income ratio that is feasible to think we can carry with a newborn? If it helps, we have good health insurance, we are neither of us very extravagant and we will have some emergency savings left -- approximately 3 months worth. But of course, there's the start up expenses of a house, plus however much babies cost...I am scared! Does anyone have any advice for us? Thank you very much!
What's a workable debt to income ratio for a young family?Your DTI of 35% is very workable! Most lenders for first time home buyers require 45-55%!!! As you can tell, you are well below the norm... This is good... What's more... NO CREDIT CARD DEBT!! That's awesome... You should be proud of yourselves and you are off and running!! Don't be too hasty paying down the student loans.. They are more than likely at a ridiculously low interest rate! I am NOT a tax expert, but,your husband can also claim more deductions on his paycheck alsoso that you will see more of his earnings with each paycheck and still get a healthy refund each year! This will be the best financial move you have ever made.. Congrats!
What's a workable debt to income ratio for a young family?Mortgage lenders look for front end (just the housing expense) and back end (total debt ratio) of 26/38. There are exceptions to these rules and compensating factors such as excellent credit scores, liquid assetts (think emergency fund), etc. You should be fine assuming you can keep future spending in line.
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