Finmo has color-coded the DTI (debt to income ratio), LTV (loan to value) and FICO credit scores to enhance your underwriting process by providing clear visual cues that help you make faster and more accurate financial decisions.
What are DTI, LTV and FICO?
Front-end DTI (Debt to Income): This ratio represents the borrower’s housing related costs divided by monthly income.
Back-end DTI (Debt to Income): This ratio represents the borrower’s housing related costs and other debt obligations divided by monthly income.
LTV (Loan to Value): This ratio represents the loan to the purchase price of the home
FICO: This is the borrower's personal credit score based on their credit history that lenders use to assess whether to approve credit.
What do the DTI colors represent?
Green (Low Risk): Ratio is well within conventional and FHA loan standards.
Yellow (Borderline): Ratio is acceptable, but may require further assessment of other compensating factors.
Red (High Risk): Ratio is considered high risk for conventional loans. Borrowers may need other compensating factors to qualify.
What do the LTV colors represent?
Green (Low Risk): ≤ 80%
Optimal range, generally qualifying for conventional loan terms with no private mortgage insurance (PMI) requirements. Borrowers are considered lower risk because they have significant equity in the property.
Yellow (Borderline): 80.01% - 90%
Often acceptable but may trigger PMI requirements and tighter underwriting, as the borrower’s equity cushion is slimmer. FHA and VA loans commonly fall within this range, but may have their own insurance requirements.
Red (High risk): > 90.00%
Considered higher-risk and typically requires PMI, higher interest rates, and additional scrutiny. Some programs, like FHA, allow higher LTVs but have mortgage insurance requirements and more stringent underwriting to mitigate risk.
What do the FICO colors represent?
Green (Excellent & Very good): Likely to qualify for the best rates and gain approval easily.
Yellow (Good): Likely to qualify for most loans, may have higher rates than those with a higher score.
Orange (Fair): May qualify for FHA/VA/USDA loans, but will face greater restrictions and higher costs.
Red (Poor): Difficult to qualify and may require credit improvement.
Should you need further help please click the chat button in Finmo or send an email to supportus@lendesk.com