The lender must determine the Borrower’s monthly liabilities by reviewing all debts listed on the credit report, Uniform Residential Loan Application (URLA), and required documentation.
All applicable monthly liabilities must be included in the qualifying ratio. Closed-end debts do not have to be included if they will be paid off within 10 months and the cumulative payments of all such debts are less than or equal to 5 percent of the Borrower’s gross monthly income. The Borrower may not pay down the balance in order to meet the 10-month requirement.
For FHA policy information see Handbook 4000.1 II.A.4.b.iv(A) and II.A.5.a.iv(A) at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh