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Installment loan less than 10 payments rule?

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Established Contributor

Installment loan less than 10 payments rule?

Anyone know if the less than 10 months left on an installment loan rule applies to exclude from DTI?

 

Also, if there is no amount given for a student loan repayment, how is that calculated for DTI?

Starting Score: 10/1/2011 EQ 568 TU 593
Current Score: EQ 664 TU 700 EX 701 (FAKO)

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Senior Contributor

Re: Installment loan less than 10 payments rule?

I'm not an expert on mortgages, other than I've had 3 or 4, but I did find this site which seems to cover the basics.

 

http://www.teamdean.com/FHA_20_Loans_20_and_20_Credit.html

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Established Contributor

Re: Installment loan less than 10 payments rule?

That is correct , installment debt w/10 or less payments don't apply to dti. I use to be a mortgage underwriter before housing crisis I usually asked to have one placed by student loan company or I calculated 2-3% of amt which is higher.


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Member

Re: Installment loan less than 10 payments rule?

I just read through the USDA GUS Underwriter Manual looking for this answer and if 401k loans count against DTI.  The manual clearly states that installment loans ending within SIX  months would be automaticly excluded from DTI, even if entered by the underwriter, although the underwriter can reclassify them to revolving if they thought it was a significant risk. 401k and other colateralized debts are NOT counted in in DTI.

 

I would ASSUME FHA requirements are similar, but I'd look for a similar reference.

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Moderator Emerita

Re: Installment loan less than 10 payments rule?


@Strut wrote:

I just read through the USDA GUS Underwriter Manual looking for this answer and if 401k loans count against DTI.  The manual clearly states that installment loans ending within SIX  months would be automaticly excluded from DTI, even if entered by the underwriter, although the underwriter can reclassify them to revolving if they thought it was a significant risk. 401k and other colateralized debts are NOT counted in in DTI.

 

I would ASSUME FHA requirements are similar, but I'd look for a similar reference.


+!  This is what it is in our area since the credit crunch. I think this can be modified by individual lenders because FHA states 10 months but it has been 6 months here for several years.

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