Fannie Mae – DTI Calculation on a Jointly Owned Property

Question:

I have a borrower who owns a farm with his brother. They have a mortgage on the land and split the monthly payment 50/50 for the last 3 years. Is it possible to document this and only include half the payment that is listed on the credit report in his DTI

Answer:

Your scenario is not defined by either agency within their selling guides, so your entire outcome is contingent on lender discretion and their interpretation of the guidelines.

That said, Fannie Mae offers an FAQ found on their AskPoli™ site that indicates this may not be possible.

Reference:

From the FAQ in AskPoli™:

For debts paid by others, if only a portion of the debt is paid by another party, can that portion be excluded in the DTI ratio?

In order for non-mortgage and mortgage debt to be excluded from the debt-to-income (DTI) ratio, the other party has to pay the complete monthly obligation every month for a minimum of 12 months (and the other party cannot be an interested party for non-mortgage debt).

For mortgage debt, the following additional requirements must be met:

• The party making the payments is obligated on the mortgage debt,
• There are no delinquencies in the most recent 12 months, and
• The borrower is not using rental income from the applicable property to qualify.

All other requirements of Debts Paid by Others in B3-6-05, Monthly Debt Obligations must be met.

MortageGuidelines.com Resource:

MortgageGuidelines.com offers an All-Agency Comparison Chart for ‘Debts Paid by Others, accessible under “Guideline References” in the “All Agency” category.