Housing allowance - PITI reduction?

[Anonymous]

Is anyone aware of any programs or lenders that will consider underwriting a monthly housing allowance -- such as those given to military, clergy, or others and to be used solely for housing expenses -- by deducting it from the monthly payment amount  instead of adding it to the income?

[Anonymous]

The homebuyer in question is looking at a property in a low-income census tract, if that provides mroe options....

[VALoanMaster]

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@Anonymous wrote:

Is anyone aware of any programs or lenders that will consider underwriting a monthly housing allowance -- such as those given to military, clergy, or others and to be used solely for housing expenses -- by deducting it from the monthly payment amount  instead of adding it to the income?

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Hi Sarek,

Where is the housing allowance coming from & how long will it continue?

[Anonymous]

This prospective borrower is a clergyman, and the housing allowance is coming from the religious organization and is expected to continue for five years.

He has a signed agreement to that effect from the organization.

Besides the housing allowance he has some salary income, but the debt-to-income ratio on the proposed loan would be high.

[VALoanMaster]

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@Anonymous wrote:

This prospective borrower is a clergyman, and the housing allowance is coming from the religious organization and is expected to continue for five years.

He has a signed agreement to that effect from the organization.

Besides the housing allowance he has some salary income, but the debt-to-income ratio on the proposed loan would be high.

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ok. If I remember correctly the housing allowance can be grossed up because it's considered non-taxable income.

How high is the DTI?

[Anonymous]

Thank you for your reply, VALoanMaster; that's a good point -- and grossing up could make the difference here.

The DTI as I calculated previously is around 55% (without grossing up and including the allowance in income rather than reducing from the payment).

As I mentioned, the proposed property is in a low-income census tract... Aren't there special programs with high DTI's for such properties?

[VALoanMaster]

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@Anonymous wrote:

Thank you for your reply, VALoanMaster; that's a good point -- and grossing up could make the difference here.

The DTI as I calculated previously is around 55% (without grossing up and including the allowance in income rather than reducing from the payment).

As I mentioned, the proposed property is in a low-income census tract... Aren't there special programs with high DTI's for such properties?

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Unfortunately the only option with DTI that high will be FHA. There are a couple of programs available through Fannie Mae & Freddie Mac for low to moderate income borrowers but the DTI is still limited to 45% max.