The Omission of Contingent Liabilities From Qualifying Ratios

Did You know that conventional and FHA differ on the omission of contingent liabilities from the Borrower’s debt ratios?

Fannie Mae and Freddie both allow the omission of NON-MORTGAGE debt from the Borrower’s debt ratios IF:

• A party other then the Borrower has been making the payments in a timely manner and have 12 months of cancelled checks ( or bank statements) in their name only then that debt may be excluded from the Borrower’s qualify debt ratios.
• FHA on NON-MORTGAGE debt REQUIRES that the party that is making the payments be obligated on the debt along with the Borrower.
• All three Agencies agree that any debt paid by a self employed Borrower’s business MUST be listed as an expense on the business tax return as a line item AND 12 months proof that the business paying for it.

There are many ways to qualify for a loan and our experienced loan consultants know to think beyond regular bank conventional way of underwriting loans, we structure loans the right way, why? Because we are mortgage brokers and we have the lenders who have many options when it comes to fulfilling the American Dream. Contact us for more information.