On an FHA loan, can debts be excluded from the DTI if paid by the business?
On an FHA loan, can debts be excluded from the DTI if paid by the business?
When business debt is reported on the Borrower’s personal credit report, the debt must be included in the DTI calculation; unless, the lender can document that the debt is being paid by the Borrower’s business, and the debt was considered in the cash flow analysis of the Borrower’s business. This would reflect on the business tax returns as a business debt related to the obligation equal to or greater than the amount of payments documented as paid out of company funds. Where the Borrower’s business tax returns show an interest expense related to the obligation, only the interest portion of the debt is considered in the cash flow analysis. Twelve (12) months cancelled checks from the business account are required as well to show payment.