The Motley Fool Discussion Boards

Previous Page

Personal Finances / Buying or Selling a Home


Subject:  Re: Debt-to-income ratio if self-employed Date:  2/11/2013  7:32 PM
Author:  CCinOC Number:  124734 of 128866

I know that if a lender uses average credit card balance to calculate debt-to-income ratio, I don't meet the 40% number. I pay the cards off every month, but my average credit card balance is high since I charge everything. If they use minimum required payment, I should be fine.

It depends on the lender. The guideline at my best priced wholesale source is that 5% of the balance at the time the credit is pulled will be used to calculate DTI. This lender doesn't allow paying off of revolving accounts to qualify unless the application includes a letter from the creditor stating that the account is closed to further purchases. Therefore, if you wanted to use this best priced lender, you'd have to pay cash for a while until your credit report shows all revolving accounts with a zero balance.

At other lenders, you can show that you have a practice of paying all accounts to zero every month, such as copies statements for six months. Then 5% of the balance would not be counted as an ongoing monthly liability.
Copyright 1996-2018 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us