Analyzing Borrower Financials Flashcards

A credit report shows a revolving account balance of $3,000 with no monthly payment listed. Under Fannie Mae, what payment is used if no documentation is available?

Answer: $150 (5%)

Fannie Mae uses 5% of the outstanding balance when no revolving payment is reported.

Under FHA guidelines, if a student loan shows a $0 monthly payment on the credit report, what payment is used for DTI?

Answer: 0.5% of the outstanding balance

FHA uses 0.5% of the outstanding balance when the reported payment is zero.

A borrower co-signed a car loan for a sibling. When can the payment be excluded from the borrower's DTI under agency guidelines?

Answer: When the sibling has made the payments for the most recent 12 months, documented

Contingent debt may be excluded with 12 months of documented payments by the other party.

Under Fannie Mae, how is a monthly auto lease payment treated in DTI?

Answer: Always included regardless of remaining term

Lease payments are included regardless of remaining term because leases are typically renewed.

How are open 30-day charge accounts (paid in full monthly) typically handled under Fannie Mae when there is no monthly payment?

Answer: The borrower must have verified funds to pay off the balance, in addition to required funds to close

Fannie Mae requires sufficient verified funds to cover the 30-day account balance instead of adding a payment.

A borrower has a business debt reported on their personal credit report. When can it be excluded from DTI?

Answer: When the business pays the debt, documented with 12 months of business payment records

Business debt can be excluded if documented as paid by the business and the business cash flow analysis accounts for it.

A borrower's gross monthly income is $7,500 and proposed PITIA is $2,100. What is the front-end (housing) ratio?

Answer: 28%

$2,100 / $7,500 = 28%.