Selling Guide

Published December 16, 2020

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What is included in the monthly housing expense?

Monthly Housing Expense

Monthly housing expense is the sum of the following and is referred to as PITIA for the subject property:

  • principal and interest (P&I);
  • property, flood, and mortgage insurance premiums (as applicable);
  • real estate taxes;
  • ground rent;
  • special assessments;
  • any owners’ association dues (including utility charges that are attributable to the common areas, but excluding any utility charges that apply to the individual unit);
  • any monthly co-op corporation fee (less the pro rata share of the master utility charges for servicing individual units that is attributable to the borrower’s unit);
  • any subordinate financing payments on mortgages secured by the subject property.

Note: The monthly payment of a subordinate lien associated with a business debt secured by the subject property can be excluded from the monthly housing expense if it meets the requirements of  Business Debt in Borrower’s Name in B3-6-05, Monthly Debt Obligations.

Lenders must enter all components of the monthly housing expense on the loan application including subordinate financing P&I, homeowner's insurance, supplemental property insurance, real estate taxes, mortgage insurance, association/project dues, and other proposed housing expenses.

If the subject mortgage is secured by the borrower's principal residence, the monthly housing expense is based on the qualifying payment required in accordance with B3-6-04, Qualifying Payment Requirements . This amount is the monthly housing expense used to calculate the debt-to-income (DTI) ratio.

If the subject mortgage is secured by a second home or an investment property, the qualifying payment amount is considered one of the borrower's monthly debt obligations when calculating the DTI ratio.

For additional information, see B3-6-03, Monthly Housing Expense for the Subject Property.

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