source:
  type: guide
  id: fnma-sel-b3-6-07
  authority: Fannie Mae Selling Guide B3-6-07 — Debts Paid Oﬀ At or Prior to Closing
  description: Fannie Mae Selling Guide B3-6-07 — Debts Paid Oﬀ At or Prior to Closing.
  coverage_tier: operative
obligations:
- id: fnma-sel-b3-6-07-full
  canonical_id: fnma-sel-b3-6-07-full
  section: Fannie Mae Selling Guide B3-6-07 — Debts Paid Oﬀ At or Prior to Closing
  type: do
  tags:
  - regulator-direct
  - fnma
  - selling-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Selling Guide B3-6-07 — Debts Paid Oﬀ At or Prior to Closing
    source_class: fnma-guide
    source_url: https://singlefamily.fanniemae.com/media/document/pdf/selling-guide
    snapshot_id: 5f7b8b79da595d76
    fetched_at: '2026-05-25T14:09:57Z'
    content_hash: sha256:98cf85a02861bbe84914a0e339b327c8fc131869a8a573882007bbeea60c5701
    paragraph_quote: 'B3-6-07, Debts Paid Oﬀ At or Prior to Closing (04/05/2023) Introduction
      Published May 6, 2026 513 This topic contains information on debts paid oﬀ at
      or prior to closing, including: Payoﬀ or Paydown of Debt for Qualiﬁcation Open
      30-Day Charge Accounts Collections, Charge-Oﬀs of Non-Mortgage Accounts, Judgments,
      and Liens Payoﬀ or Paydown of Debt for Qualiﬁcation Payoﬀ or paydown of debt
      solely to qualify must be carefully evaluated and considered in the overall
      loan analysis. The borrower’s history of credit use should be a factor in determining
      whether the appropriate approach is to include or exclude debt for qualiﬁcation.
      Generally Installment loans that are being paid oﬀ or paid down to 10 or fewer
      remaining monthly payments do not need to be included in the borrower’s long-term
      debt. If a revolving account balance is to be paid oﬀ at or prior to closing,
      a monthly payment on the current outstanding balance does not need to be included
      in the borrower''s long-term debt, i.e., not included in the debt-to-income
      (DTI) ratio. Such accounts do not need to be closed as a condition of excluding
      the payment from the DTI ratio. See B3-6-02, Debt-to-Income Ratios for additional
      guidance on calculating total monthly obligations for qualifying purposes. Open
      30-Day Charge Accounts For open 30-day charge accounts that do not reﬂect a
      monthly payment on the credit report, or 30-day accounts that reﬂect a monthly
      payment that is identical to the account balance, lenders must verify borrower
      funds to cover the account balance. The veriﬁed funds must be in addition to
      any funds required for closing costs and reserves. Note: DU will include the
      balance of the 30-day charge accounts on the loan application in the Reserves
      Required to be Veriﬁed amount shown on the DU Underwriting Findings report.
      However, for transactions that do not require the veriﬁcation of reserves, the
      balance of 30–day charge accounts in the Reserves Required to be Veriﬁed amount
      will be reduced by any cash out the borrower will receive through the transaction.
      If the borrower paid oﬀ the account balance prior to closing, the lender may
      provide proof of payoﬀ in lieu of verifying funds to cover the account balance.
      Collections, Charge-Oﬀs of Non-Mortgage Accounts, Judgments, and Liens Delinquent
      credit—including taxes, judgments, charge-oﬀs of non-mortgage accounts (see
      below for exceptions), tax liens, mechanic''s or materialmen’s liens, and liens
      that have the potential to aﬀect Fannie Mae’s lien position or diminish the
      borrower’s equity—must be paid oﬀ at or prior to closing. Delinquent federal
      income taxes that are approved to be paid by a monthly installment agreement
      with the IRS Published May 6, 2026 514 must be paid in full at or prior to closing
      if there is any indication that a Notice of Federal Tax Lien has been recorded
      against the borrower in the county in which the subject property is located.
      For additional information about federal income tax installment agreements,
      see B3-6-05, Monthly Debt Obligations. For details regarding delinquent federal
      income taxes that the IRS has approved to be paid through an installment agreement
      that can be included as a monthly debt obligation, rather than being paid in
      full, also see B3-6-05, Monthly Debt Obligations. For manually underwritten
      loans, non-medical collection accounts and charge-oﬀs on non-mortgage accounts
      do not have to be paid oﬀ at or prior to closing if the balance of an individual
      account is less than $250 or the total balance of all accounts is $1,000 or
      less. Non-medical collection accounts and charge-oﬀs on non-mortgage accounts
      that exceed these limits must be paid oﬀ at or prior to closing. For DU underwritten
      loans, refer to B3-5.3-09, DU Credit Report Analysis. Recent Related Announcements
      The table below provides references to recently issued Announcements that are
      related to this topic. Announcements Issue Date Announcement SEL-2023-03 April
      05, 2023'
  judgment: false
