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The refi prequal letters I've been getting all indicate a 40% DTI will get me the best rate.

Hey hol,

Appears you have your answer on how DTI is calculated with regards to credit card balances that get paid in full each month. I know your concern is based on being near the 40% DTI. I've not heard that number used in the past. On Conforming loans under $417,000. my understanding is there is a hard stop at a 45% DTI. You probably have plenty of space. On loans that are conforming, but at the next loan size threshold ($417,001 up to $625k) my understanding is that DTI has a hard stop at 41%. However, these are the guidelines my bank uses and other lenders may have different guidelines.

The one item I find confusing is an interest rate being based on DTI. There are many variables involved in determining rate, but on a Conforming loan I do not know of any bump to rate based on DTI at various thresholds. You're either under 45%, or declined.
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