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The Note Investor PodcastAuthor: Dan Deppen
The Note Investor Podcast will guide you through the ups and downs of note investing, and teach you about all of the nitty gritty details of the business that other people won't talk about . Your host, Dan Deppen is a former aerospace engineer and product manager who transitioned away from cubicle life to full time note investing in 2018. Our website is www.fusionnotes.com, where you can subscribe to this podcast, comment, and find links to other information on note investing. Language: en Genres: Business, Entrepreneurship, Investing Contact email: Get it Feed URL: Get it iTunes ID: Get it |
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Understanding DTI for seller finance deals
Episode 152
Tuesday, 6 October, 2026
Debt-to-income ratio is the number everyone in mortgage lending uses, and it's still one of the easiest things to get wrong on a seller finance deal. A borrower at 60% DTI can be a safer bet than one at 50%. In this episode I walk through what DTI actually measures, how I calculate it, and how to use it alongside the other factors that tell you whether a borrower can really carry the loan. I cover the formula (new PITI plus the monthly debts on the credit report, divided by gross income, never take-home pay), where the income number comes from for W-2, self-employed and fixed-income borrowers, and the expense ratios I apply to self-employed bank statement deposits. I also get into where DTI fits in Dodd-Frank ability to repay, why the 3-loans-a-year rule has nothing to do with it, and why we use 57% as a compliance anchor even though I don't want to lend anywhere near that with my own money. Then residual income and compensating factors: down payment, cash reserves, housing payment history, job stability, and what to do when a borrower is marginal, including cosigners that actually reduce risk, paying off a car or a card to bring DTI into line, and using a lease option to give them time to clean things up. Why you always use gross income, not take-home How self-employed and fixed-income borrowers get their income number The 57% compliance anchor vs. the DTI you should actually lend at Why residual income matters more than the ratio for fixed-income borrowers The compensating factors and levers that save a marginal deal Why barely compliant can still be a bad loan Note training: www.notelaunchpad.com Note buying: www.fusionnotes.com Note origination and underwriting: www.calltheunderwriter.com Mortgage broker / DSCR servicers in TX, SC, FL and CO: www.callthemortgageguy.com
