Can you pay installment debt down for fha loan?

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David Auer asked a question: Can you pay installment debt down for fha loan?
Asked By: David Auer
Date created: Tue, Mar 23, 2021 7:02 PM
Date updated: Wed, Jun 22, 2022 11:19 AM

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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… FHA: You can omit these debts as long as the payment is less than 5% of your monthly income.

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FHA loan rules in HUD 4000.1 also include standards for reviewing a borrower’s installment loan debt and revolving charge accounts. According to the rules, installment debt has a strict definition: “Installment Loans refer to loans, not secured by real estate, that require the periodic payment of Principal & Interest. A loan secured by an interest in a timeshare must be considered an Installment Loan.” How is the lender directed to review such accounts?

FHA loan rules do not allow the borrower to use certain types of credit for the down payment. Borrowers can only make a down payment from a list of approved sources which include money saved by the borrower. The nature of your existing debt is also reviewed.

and Debts (TOTAL) PAGE 144 (H) Installment Loans (TOTAL) (1) Definition Installment Loans refer to loans, not secured by real estate, that require the periodic payment of P&I. A loan secured by an interest in a timeshare must be considered an Installment Loan. (2) Standard The Mortgagee must include the monthly payment

Now : For installment loans with 10 or fewer payments, underwriters include any portion of the payment exceeding five percent of a borrower’s monthly income in the DTI calculation. If the ...

Under the revised HUD 4000.1 FHA Handbook, installment debt payments that have 10 months or less in monthly payment left, the following applies: can only be omitted from debt to income ratio calculations this holds true if the total monthly payments left is equal or less than 5% of the borrower’s gross monthly income

I have a $400 per month installment loan with 13 payments left, if I pay down the balance below $4000, can we exclude this debt? No . The FHA does not allow the balance to be paid down for the sake of excluding the payment. You would have to either wait a few more months or try to qualify in a different way. Question… I have just a few months left on a car lease. I can exclude the car lease payment from my DTI. right? No. A lease is not an installment loan. It is a rent payment.

That means if you have $30,000 in student loans, the lender will include $600 per month toward your total debt payments. For installment debts, the lender will use 5% of the outstanding balance. This rule change will probably have the biggest effect on first time home buyers – especially new grads. Getting Another FHA Loan

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