Overhaulin'

Paying down a car Loan to improve DTI when getting a mortgage?

Hello, I heard that if I have less than 10 payments left on a car loan, it won't be counted against by income when calculating DTI ratio when getting a mortgage. Is this true? Also, can I pay a large amount now to make the balance less than 10 x minimum payment?

Public Comments

1. That is true in some instances. It really depends on the mortgage program that you are approved for and the mortgage company you or your mortgage broker use. Normally a debt that has less than 10-9 months left are not counted as debt, therefore your ratio would be a little lower than had you owed more than 12 months on the payment. If you do make a large payment toward you car debt, be prepared to prove that the funds in fact were yours with bank statements of canceled checks. I hope this has been of some benefit to you, good luck "FIGHT ON"