Subprime loans and high debt to income ratio
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Subprime loans and high Debt To Income (DTI)ratios consists of your gross monthly income, liabilities and your monthly housing payment, including taxes and insurance. High DTI ratios can be classified in the subprime loan category since they exceed 45%.Most sub prime lenders will stop at 50% DTI but there are some that will go as high as 55%. Keep in mind however that sub prime or conventional Debt To income Ratio does not take into account bills like cell hone, gasoline, food and other daily expenses.
Subprime lenders are going to start tightening up their guidelines on their maximum allowable debt to income ratios. This obviously has to do with the recent subprime market "fallout" and the high number of foreclosures on mortgages originated in the subprime sector of the market.