11-02-2012 12:39 PM
Hello everyone. I'm planning to purchase a home thru FHA in Feb. and need some advice regarding installment loans. I have a student loan with a balance of $3,000. My payments are $131.00 a month. I have read that if your remaining bal. on an installment loan is less than 10 payments this figure is not counted in your DTI. I'm really hoping someone can verify this cause, if so, I'm planning to go above and beyond to get this balance down to around say $1,200 by the end of January-which would make the loan having less than 10 payments owed. This would be huge in helping me to obtain the mortgage I'm wanting. Thank you in advance.
11-03-2012 05:04 AM
11-03-2012 09:19 AM
Yes, if you have less than 10 payments remaining then you don't count that into dti!
OP, this is lender specific. Some lenders will drop off the debt at 10 months, some at 6 months and some won't drop off the debt unless it is paid in full.
I know that Chase requires the account to be paid in full before they won't include it in your DTI ratios.
At least that is the way it is here in Florida.
Ask your prospective lender first to see what their requiremennts are - or go to a mortgage banker that funds their own loans.