Credit Card Center Advertiser Disclosure

Regular Contributor
Posts: 178
Registered: ‎04-30-2012
0 Kudos

Selling a home via land contract, how does it affect DTI?

My wife and I put a deposit down on a new construction home last month.  3 days later, we sold our Condo via Land Contract.  Since the mortgage from our existing residence is technically still in my name, does it still get calculated with our DTI?  I am curious more than anything.  We got approved for both mortgages, just wondered if it will make our DTI better seeing that someone else is making the payment.  Thanks in advance for your insight!

Starting Score:2/1/16 565
Current Score: 3/1/16 575
Lender Mid Score: 3/1/16 575

Goal Score: 700

Take the FICO Fitness Challenge
Posts: 10,804
Registered: ‎03-06-2010
0 Kudos

Re: Selling a home via land contract, how does it affect DTI?

Well, your new lender will count it in your DTI for your new mortgage. They may or may not include the payments you are receiving from the buyer - it depends upon how long you have been collecting the payments from this buyer and if you have been reporting it on your taxes.


A land contract is essentially selling your home on an installment basis.  You would need an experienced attorney to draw up a land contract in order to protect your interests. In fact, here in Fl as agents we are prohibited from preparing land contracts; they must be prepared by an attorney.


I hope you have the buyer making the payments directly to you so you can make the payments to the lender because with a land contract you are still responsible for the mortgage payment to your lender. The only way to not be responsible for the payment is to have your buyer qualify for the loan and/or buy the house outright from you with another third party mortgage. If the buyer defaults on a land contract, then you need to foreclose against them rather than just evict them because a land contract really is a purchase agreement and not a lease.

Forums posts are not provided or commissioned by FICO. Forums posts have not been reviewed, approved or otherwise endorsed by FICO. It is not FICO's responsibility to ensure all posts and/or questions are answered.

† Advertiser Disclosure: The listings that appear on myFICO are from companies from which myFICO receives compensation, which may impact how and where products appear on myFICO (including, for example, the order in which they appear). myFICO does not review or include all companies or all available products.
‡ Credit cards for FICO Score ranges: The score ranges are guidelines based on internal myFICO analysis of actual applicant approvals, and having a FICO Score in a particular range does not guarantee you will be approved for credit cards recommended in that range. These ranges were not provided by any card issuer.

* For complete information, see the terms and conditions on the credit card issuer’s website. Once you click apply for this card, you will be directed to the issuer’s website where you may review the terms and conditions of the card before applying. While myFICO always strives to present the most accurate information, we show a summary to help you choose a product, not the full legal terms - and before applying you should understand the full terms of products as stated by the issuer itself.

Copyright ©2001-2015 Fair Isaac Corporation. All rights reserved.   | Terms of Use | Privacy Policy | Sitemap

IMPORTANT INFORMATION: All FICO® Score products made available on include a FICO® Score 8, along with additional FICO® Score versions. Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more

FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.