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RecoverCurious4423 t1_iy8mpjt wrote

But that DTI includes his mortgage and student loans. I’m just trying to learn a bit here for my own interests, so I’m not trying to imply anything. As a consumer I had always been under the impression that longer term and lower interest rate debt isn’t looked at the same way as revolving consumer debt might be regarded? His outstanding debt should be 40% of his annual income of $64,000 or $25,600 in outstanding debt according to the information provided. I managed to get out of pharmacy school with around $160,000 in student loans and a brand new mortgage of $300,000, with an initial salary of only $60,000 per year (this was in the late 1990’s). So with that background I think this OP seems to be in a strong financial position compared to my reality back then. So there must be more factors considered by a lender than just income and DTI? I would love to understand this a bit better? Thank you

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Ineedanro t1_iy8ny5r wrote

Doesn't matter. He cannot afford the RV, with or without a loan.

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HuckSC t1_iy8nx3d wrote

Longer term for a house is fine. A 20 year loan for a depreciating asset like a motor home is a horrible decision. They’ll immediately be underwater and don’t currently have the cash flow to weather any bumps in the road.

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Shaybahm t1_iy8p0rh wrote

Lenders take a lot of different things into consideration. There’s the basics like income and DTI, but there is also your unsecured debt to income ratio (the ratio of total unsecured debt vs your annual income), net disposable income (amount of money you have left each month after all reported debts are paid. Time at your job, time within your job industry, length of time at your address, whether you rent or own your home. Also, lenders typically prefer your DTI be below 40% WITH new debts figured in. So if OP is already at 40%, he will be above that amount once the RV loan is figured in.

ETA: mortgage payments are viewed the same as any other installment payment. Student loans can sometimes be an exception, but are typically figured at 1% of the balance for monthly payment. The only debt that typically holds almost zero weight is medical debt.

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RelishMule t1_iy8spx9 wrote

  1. Homes appreciate in value, whereas RVs depreciate. Home is a much safer loan for the bank.

  2. Your initial salary may not have been great, but you just graduated with an advanced degree into a "safe" field with a good opportunity for higher income later.

  3. Student debt is also treated much differently (and generally has lower monhtly payments over a longer period of time, so not an outsized effect on DTI)

  4. For calculating DTI, usually only the minimum payments are calculated for the consumer debt. Not always the best metric.

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