The Washington Post By Kenneth R. Harney July 18, 2014
For many home purchasers, qualifying for a mortgage is not only a tough challenge but also one that ends unhappily: They get rejected.
The reasons for the turndowns typically involve multiple factors: below-par credit scores, inadequate documented income, little or no savings.
But a new survey by credit-score giant FICO offers a peek inside the heads of credit-risk managers at financial institutions. Researchers asked a representative sample of them what single factor makes them most hesitant to fund a loan request — in other words, what’s most likely to prompt them to say no.
Tops on the list? Surprise, it’s not your credit scores. And it’s not how much you’ve got for a down payment or what you have in the bank. It’s your DTI — your debt-to-income ratio. Nearly 60 percent of risk managers in the FICO study rated excessive DTIs as their No. 1 concern factor; that’s five times the percentage who picked the next biggest turnoff. Read more