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Car payments and loan qualification

I have 5 months left on my car payment. At what point are these payments not factored into my loan? Do they have to be completely paid off? by loren.t8884 from Astor, Florida. Oct 16th 2015 Reply


Jim Marcinkowski (jimmarcinkowski)
#113 ranked lender in Florida - 221 contributions

Sorry, for most mortgages, they can be disregarded now.

Oct 16th 2015
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Kirk Anderson (KirkAnderson)
#3 ranked lender in Arizona - 47 contributions

If it is an Installment loan versus a Lease, the payments would not be used in calculating your debt to income ratios for qualification purposes...

Oct 16th 2015
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William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,055 contributions

More info is needed to properly answer your question.. the guidelines state that if you have a debt that is due to be paid off within the next 6 months, then it can be deducted from your ratios for qualifying purposes.. If your vehicle is a lease, then the payment will not drop off. Also, the underwriter has to determine that if they remove the debt from your ratios, that this does not put you in dire financial position.. in other words, if your DTI is 55% with out the car payment being accounted for, then it's possible the underwriter could deny it.. it's the underwriters discretion if they feel this would create a financial hardship.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com NMLS# 226347

Oct 16th 2015
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Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 3,571 contributions

The old rule was that an installment loan with less than 10 payments remaining is not counted in your debt to income ratio. Brand NEW RULES that just came out make it MUCH MORE complicated, and the underwriter can't just automatically remove it. How many month left, how much of an impact does it have on your overall ratios, and more. Be sure to work with a lender who knows and understand these rules, as I see many wrong answers here. I lend in MN, WI, and SD only.

Oct 16th 2015
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Jim Marcinkowski (jimmarcinkowski)
#113 ranked lender in Florida - 221 contributions

For most mortgages, the payments would be disregarded.

Oct 16th 2015
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They stop counting against you when you get to 10 months or less.

Oct 16th 2015
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William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,055 contributions

Joe Metzler is correct, 10 months, (my mind said 10, but my fingers typed 6..ooops), Anyway.. here's a snippet right out of the FHA lending guide. "Debts lasting less than ten months must be included if the amount of the debt will affect the borrower's ability to pay the mortgage during the months immediately after loan closing, especially if the borrower will have limited or no cash assets after loan closing. Note: Monthly payments on revolving or open-ended accounts, regardless of their balances, are counted as liabilities for qualifying purposes even if the accounts appear likely to be paid off within ten months or less. " Sorry for the confusion.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com NMLS# 226347

Oct 16th 2015
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Scott Chinchar (scotty700@gmail.com)
#281 ranked lender in Florida - 2 contributions

They are not factored in when you have less than 10 payments to go. What are you trying to do? Can I help?

Oct 16th 2015
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