What debts are not considered in the qualifying ratios?

Obligations not considered debt include:  
• medical collections 
• federal, state, and local taxes, if not delinquent and no payments required
• automatic deductions from savings, when not associated with another type of obligation
• Federal Insurance Contributions Act (FICA) and other retirement contributions, such as 401(k) accounts
• collateralized loans secured by depository accounts
• utilities 
• child care
• commuting costs
• union dues 
• insurance, other than property insurance
• open accounts with zero balances 
• voluntary deductions, when not associated with another type of obligation.   

For additional information see Handbook 4000.1 II.A.4.b.iv(Q) or II.A.5.a.iv(R)  available at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.

Topic Number: KA-04521