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Are 401k loan payments calculated into your dti ratios?

Frequent Contributor

Are 401k loan payments calculated into your dti ratios?

Now I am nervous. My lender originally told me 401 k loan payments weren't calculated into dti ratios. Today in an email she made it sound like they were. She has my pay stubs already so knows there are loan payments taken out.  Also

 how much of my annual bonus and overtime do I get credit for?  If I get credit for all of it I should be  just fine. I made 50,000 last year.  My monthly debt payments including 401k loan is 880.00 a month.  I can payoff the small cards which would bring the monthly payments down to 800.00 a month If need be.  My house loan payment including everything will be between 820.00-850.00 a month.  If I don't get credit for bonuses and overtime my base salary will be just over 43,000.  Do I need to be nervous? We are under contract and I don't want it to all fall apart now.  

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Message 1 of 9
8 REPLIES
Valued Contributor

Re: Are 401k loan payments calculated into your dti ratios?

Your debt owed and being repaid is counted toward your DTI.

 

Your W2 will be averaged for your overtime and bonus if you received them for the last few years. If this is the first year you received either of them they usually are not considered, but YMMV according to lender.

Good Luck
May all your dreams and wishes become a reality!
Message 2 of 9
Frequent Contributor

Re: Are 401k loan payments calculated into your dti ratios?

The bonuses 1500.00 a year is guaranteed and my bonus for last year will hit next month so I think I will be ok and get credit for the bonuses atleast.  I am just nervous and parancid now.   Have done the dti calculators online and it looks ok.

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Message 3 of 9
Valued Contributor

Re: Are 401k loan payments calculated into your dti ratios?

Nothing to worry about Smiley Happy

Good Luck
May all your dreams and wishes become a reality!
Message 4 of 9
Valued Contributor

Re: Are 401k loan payments calculated into your dti ratios?

I have received a bonus of $5,000-$6,000 every year in Feb/Mar for the last 6 years. So my bonuses from the last 3 years were averaged and included as income.
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Message 5 of 9
Regular Contributor

Re: Are 401k loan payments calculated into your dti ratios?

Certain types of loans secured against deposited funds, where repayment may be obtained through extinguishing the asset, do not require consideration of repayment for qualifying purposes. The asset securing the loan may not be included as assets to close, or otherwise considered available to the borrower. The deposited funds can be used for

•signature loans on certificates of deposit
•loans on the cash value of life insurance policies, or

•loans secured by 401(k) accounts. 

 

I copied and pasted this from the HUD website. I'm using a 401k loan as down payment and they don't count the loan payment in the DTI.

Message 6 of 9
Senior Contributor

Re: Are 401k loan payments calculated into your dti ratios?


JonRun wrote:

Certain types of loans secured against deposited funds, where repayment may be obtained through extinguishing the asset, do not require consideration of repayment for qualifying purposes. The asset securing the loan may not be included as assets to close, or otherwise considered available to the borrower. The deposited funds can be used for

•signature loans on certificates of deposit
•loans on the cash value of life insurance policies, or

•loans secured by 401(k) accounts. 

 

I copied and pasted this from the HUD website. I'm using a 401k loan as down payment and they don't count the loan payment in the DTI.


+1


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Message 7 of 9
Super Contributor

Re: Are 401k loan payments calculated into your dti ratios?

401k loans do not figure into dti

 

if your loan officer thinks they do.... consider another loan officer.  this isn't a hard question, what else does the LO not know?

 

 

Retired Lender
Message 8 of 9
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Frequent Contributor

Re: Are 401k loan payments calculated into your dti ratios?

I probably misunderstood her email. Yay I dont have to stress.
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Message 9 of 9