A minimal increase in housing payment may be cited as a compensating factor subject to the following requirements:
• the new total monthly mortgage payment does not exceed the current total monthly housing payment by more than $100 or 5%, whichever is less; and
• there is a documented 12 month housing payment history with no more than one 30 day late payment. In cash-out refinance transactions all payments on the mortgage being refinanced must have been made within the month due for the previous 12 months.
• If the borrower has no current housing payment lenders may not cite this compensating factor.
The current total monthly housing payment refers to the borrower’s current total mortgage payment or current total monthly rent obligation.
For additional information see Handbook 4000.1 II.A.5.d.ix(C) available at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh