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Do lenders use the monthly income based repayment amount when calculating debt to income ratio?

by happy123490 from Torrance, California. Apr 11th 2017 Reply

Jeff Phillips (JeffPhillips)
#712 ranked lender in California - 33 contributions

Hi Happy,DTI is calculated as such:New housing expense (principal, interest, taxes, insurance & HOA (if applicable) + monthly payments that appear on your credit report / Gross monthly income.There are a number of caveats regarding the income calculation and on the debt side if there are collections or deferred loans, you would have to use a percentage of the total debt. Jeff (415) 867-6488

Apr 11th 2017
John Burke (jburke)
#29 ranked lender in Texas - 227 contributions

Hi Happy123490,It sounds like you're asking about the IBR payment on student loans, right? Yes, the IBR payment can be used but only with a VA or Freddie Mac mortgage. On an FHA loan the lender must use either:? the greater of:o 1 percent of the outstanding balance on the loan; oro the monthly payment reported on the Borrower's credit report; or? the actual documented payment, provided the payment will fully amortize the loan over its term.| Please feel free to contact me for more information or help. | John Burke | Senior Mortgage Banker | Great Plains National Bank | (877)228-9069 | Lending in ALL 50 states

Apr 12th 2017
Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 4,054 contributions

How income based payments are calculated for debt ratio figures depends on what type of new loan you are taking out. Fannie Mae for example does NOT allow income based payments, but Freddie Mac does. Contact a local mortgage broker in your area for more assistance. For Income based payments loan options on homes in MN, WI, and SD, visit me at

Apr 13th 2017
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