Selling Guide

Published December 4, 2019

B3-6-04: Qualifying Payment Requirements (04/15/2014)

This topic contains information on determining the borrower’s monthly PITIA used for qualifying purposes, including:

Qualifying Payment Amount

The calculation of the qualifying payment amount for the subject property will differ based on the transaction type (as shown in the following table).

These policies apply to both manually underwritten loans and DU loan casefiles. In all cases, qualification must consider the borrower's current obligations and other mortgage-related obligations, i.e. PITIA.

Mortgage loans subject to temporary interest rate buydowns must be qualified without consideration of the bought-down rate, based on the transaction type below.

Qualifying Interest Rate Requirements
Transaction Type DU and Manual Underwriting
Fixed-rate mortgages Note rate
ARMs with an initial fixed-rate period of five years or less Greater of the note rate plus 2% or the fully indexed rate
ARMs with an initial fixed-rate period of greater than five years Greater of the note rate or the fully indexed rate

Additional Information About ARM Qualifying for DU Loan Casefiles

For DU loan casefiles, the fully indexed rate is defined as the index plus the margin as entered in the online loan application. The index and margin are required for all ARM loans submitted to DU.

If “Lender ARM Plan” is used in DU, DU uses the interest rate entered in the ARM Qualifying Rate field. If no interest rate is entered in that field, DU uses the note rate plus 2% to qualify the borrower.

Additional Qualifying Considerations for Specific Products

For additional temporary interest rate buydown requirements, see B2-1.3-05, Temporary Interest Rate Buydowns.

Related Announcements

The table below provides references to the Announcements and Release Notes that have been issued that are related to this topic.

Announcements and Release Notes Issue Date
Announcement SEL-2014–03 April 15, 2014
Announcement SEL-2013–06 August 20, 2013
Announcement SEL-2012–07 August 21, 2012
DU Version 9.0 July 24, 2012
Announcement SEL-2012–06 June 26, 2012
Announcement SEL-2010–13 September 20, 2010
Announcement SEL-2010–06 April 30, 2010
Announcement 09–32 October 30, 2009
Announcement 09-29 September 22, 2009
Announcement 09-24 July 10, 2009
Announcement 09-19 June 8, 2009