Buying a Home / Can I exclude an installment debt like a car loan if I have less than 10 payments left? Show
Loans / Can I exclude an installment debt like a car loan if I have less than 10 payments left? Refinancing / Can I exclude an installment debt like a car loan if I have less than 10 payments left?
More often than not, an installment loan (i.e. car loan or student loan) can be excluded during the approval process so long as you only have 10 payment or less to make. While some lenders have their own restrictions, most conventional and unconventional mortgage products allow you to exclude this debt. See below:
Have more questions? Download our eBook of the most popular mortgage FAQs for more helpful information!To learn more about specific mortgage requirements, be sure to speak with an experienced mortgage broker. Blue Water Mortgage is licensed in New Hampshire, Maine, Massachusetts, Connecticut, Florida, and North Carolina. Was this answer helpful?64 visitors found this helpful When can an installment debt be excluded from a borrower's obligations?Installment accounts
If ten or less months of repayment remains per the credit report, creditor verification, etc., the monthly debt may be excluded if the payment does not exceed five percent of the monthly repayment income. Installment debt may be paid down to ten months or less of remaining debt.
How many months or more must installment debts have to be counted in the qualifying ratio?All installment debt that is not secured by a financial asset—including student loans, automobile loans, personal loans, and timeshares—must be considered part of the borrower's recurring monthly debt obligations if there are more than ten monthly payments remaining.
When can debt paid by others be excluded from the DTI ratio?In order to exclude non-mortgage or mortgage debts from the borrower's DTI ratio, the lender must obtain the most recent 12 months' canceled checks (or bank statements) from the other party making the payments that document a 12-month payment history with no delinquent payments.
Can I exclude an installment debt on FHA loan?FHA: You can omit these debts as long as the payment is less than 5% of your monthly income.
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Fannie mae excluding installment debt less than 10 months
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