Do all liabilities need to be included in the debt-to-income calculation?
It is the lender’s responsibility to determine if the overall risk is acceptable based on the borrower’s cash reserves after closing, debt-to-income ratio, and overall risk of the loan. The borrower’s liabilities should include all installment loans, revolving charge accounts, real estate loans, alimony and child support payments, and all other continuing obligations. In calculating the debt-to-income ratio, the lender must include the monthly housing expense and all other recurring charges extending 10 months or more. Debts lasting less than 10 months must be counted if the amount of the debt affects the borrower’s ability to make the mortgage payment during the months immediately after loan closing (this is the underwriter’s discretion so if in doubt, ask the underwriter upfront). If a revolving credit line has an outstanding balance but does not have a minimum monthly payment amount, the monthly payment must be calculated as the greater of five percent of the balance or $10. Revolvi
Related Questions
- How will the ARRA funds be included in the calculation for proportionate share of IDEA funds for services to parentally-placed private school children?
- Are legal liabilities included in Insureme4 holiday home insurance policies?
- Do all liabilities need to be included in the debt-to-income calculation?
