Selling Guide

Published April 07, 2021

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What is included in the total monthly debt obligation?

Calculating Total Monthly Obligation

The total monthly debt obligation is the sum of the following:
  •  the housing payment for each borrower’s principal residence
  • the qualifying payment amount if the subject loan is for a second home or investment property (see B3-6-04, Qualifying Payment Requirements);
  • monthly payments on installment debts and other mortgage debts that extend beyond ten months;
  • monthly payments on installment debts and other mortgage debts that extend ten months or less if the payments significantly affect the borrower’s ability to meet credit obligations;
  • monthly payments on revolving debts;
  • monthly payments on lease agreements, regardless of the expiration date of the lease;
  • monthly alimony, child support, or maintenance payments that extend beyond ten months (alimony (but not child support or maintenance) may instead be deducted from income, see B3-6-05, Monthly Debt Obligations);
  • monthly payments for other recurring monthly obligations; and
  • any net loss from a rental property.

Note: Fannie Mae acknowledges that lenders may sometimes apply a more conservative approach when qualifying borrowers. This is acceptable as long as Fannie Mae’s minimum requirements are met, and lenders consistently apply the same approach to similar loans. For example, a lender might calculate a higher minimum payment on a credit card account than what Fannie Mae requires, which is acceptable as long as the lender consistently applies this calculation to all mortgage applications with revolving debts.

 
For additional information, see B3-6-02, Debt-to-Income Ratios.

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