DTI Question for Underwriter- HELOC's

[Sam Stabler]

Hi Guys,

How do underwriters calculate a HELOC on the DTI calculation during a 10-yr draw period?

1) Do they include the actual Interest-Only payment reported on the Credit Report?

2) Or do they term out/fully amortize the Commitment Amount regardless even if there is no outstanding on the line?

[Chris Mason]

1. Most lenders, yes, will do that. Unless of course there is a large draw on that HELOC (down payment, etc), in which case they will do the obvious thing.

2. Most lenders, no.

Best rate lenders in the universe:

1 & 2) No, they assume fully drawn, fully amortized (if it's 10 years i/o, 20 years amortized, these "best in universe" will assume a 20 year term for qualification purposes), might even hit you with a "payment shock" factor if it's currently not drawn.

An independent mortgage broker in your area will be able to show you both options, they have no reason to be biased towards one or the other, by law they get paid by the lender the same for bringing the business in the door no matter your rate.