source:
  type: guide
  id: fnma-sel-b3-6-05
  authority: Fannie Mae Selling Guide B3-6-05 — Monthly Debt Obligations
  description: Fannie Mae Selling Guide B3-6-05 — Monthly Debt Obligations.
  coverage_tier: operative
obligations:
- id: fnma-sel-b3-6-05-full
  canonical_id: fnma-sel-b3-6-05-full
  section: Fannie Mae Selling Guide B3-6-05 — Monthly Debt Obligations
  type: do
  tags:
  - regulator-direct
  - fnma
  - selling-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Selling Guide B3-6-05 — Monthly Debt Obligations
    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: 'B3-6-05, Monthly Debt Obligations (05/06/2026) Introduction
      This topic describes obligations that should be considered in underwriting the
      loan, including: Alimony, Child Support, Equalization Payments, and Separate
      Maintenance Payments Bridge / Swing Loans Business Debt in Borrower’s Name Court-Ordered
      Assignment of Debt Debts Paid by Others Non-Applicant Accounts Deferred Installment
      Debt Federal Income Tax Installment Agreements Garnishments Home Equity Lines
      of Credit Installment Debt Lease Payments Rental Housing Payment Loans Secured
      by Financial Assets Open 30–Day Charge Accounts Other Real Estate Owned—Qualifying
      Impact Revolving Charge/Lines of Credit Student Loans Alimony, Child Support,
      Equalization Payments, and Separate Maintenance Payments Published May 6, 2026
      505 When the borrower is required to pay alimony, child support, equalization
      payments, or separate maintenance payments under a divorce decree, separation
      agreement, or any other written legal agreement—and those payments must continue
      to be made for more than ten months—the payments must be considered as part
      of the borrower’s recurring monthly debt obligations. However, voluntary payments
      do not need to be taken into consideration and an exception is allowed for alimony.
      A copy of the divorce decree, separation agreement, court order, or equivalent
      documentation conﬁrming the amount of the obligation must be obtained and retained
      in the loan ﬁle. For alimony, equalization payments, and separate maintenance
      obligations, the lender has the option to reduce the qualifying income by the
      amount of the obligation in lieu of including it as a monthly payment in the
      calculation of the DTI ratio. Note: For loan caseﬁles underwritten through DU,
      when using the option of reducing the borrower’s monthly qualifying income by
      the alimony, equalization payments, or separate maintenance payment, the lender
      must enter the amount of the monthly obligation as a negative alimony or separate
      maintenance income amount. (If the borrower also receives alimony, equalization
      payments, or separate maintenance income, the amounts should be combined and
      entered as a net amount.) Bridge / Swing Loans When a borrower obtains a bridge
      (or swing) loan, the funds from that loan can be used for closing on a new principal
      residence before the current residence is sold. This creates a contingent liability
      that must be considered part of the borrower’s recurring monthly debt obligations
      and included in the DTI ratio calculation. Fannie Mae will waive this requirement
      and not require the debt to be included in the DTI ratio if the following documentation
      is provided: a fully executed sales contract for the current residence, and
      conﬁrmation that any ﬁnancing contingencies have been cleared. Business Debt
      in Borrower’s Name When a self-employed borrower claims that a monthly obligation
      that appears on their personal credit report (such as a Small Business Administration
      loan) is being paid by the borrower’s business, the lender must conﬁrm that
      it veriﬁed that the obligation was actually paid out of company funds and that
      this was considered in its cash ﬂow analysis of the borrower’s business. The
      account payment does not need to be considered as part of the borrower’s DTI
      ratio if: the account in question does not have a history of delinquency, the
      business provides acceptable evidence that the obligation was paid out of company
      funds (such as 12 months of canceled company checks), and the lender’s cash
      ﬂow analysis of the business took payment of the obligation into consideration.
      The account payment must be considered as part of the borrower’s DTI ratio in
      any of the following situations: If the business does not provide suﬃcient evidence
      that the obligation was paid out of company funds. If the business provides
      acceptable evidence of its payment of the obligation, but the lender’s cash
      ﬂow analysis of the business does not reﬂect any business expense related to
      the obligation (such as an Published May 6, 2026 506 interest expense—and taxes
      and insurance, if applicable—equal to or greater than the amount of interest
      that one would reasonably expect to see given the amount of ﬁnancing shown on
      the credit report and the age of the loan). It is reasonable to assume that
      the obligation has not been accounted for in the cash ﬂow analysis. If the account
      in question has a history of delinquency. To ensure that the obligation is counted
      only once, the lender should adjust the net income of the business by the amount
      of interest, taxes, or insurance expense, if any, that relates to the account
      in question. Court-Ordered Assignment of Debt When a borrower has outstanding
      debt that was assigned to another party by court order (such as under a divorce
      decree or separation agreement) and the creditor does not release the borrower
      from liability, the borrower has a contingent liability. The lender is not required
      to count this contingent liability as part of the borrower’s recurring monthly
      debt obligations. The lender is not required to evaluate the payment history
      for the assigned debt after the eﬀective date of the assignment. The lender
      cannot disregard the borrower’s payment history for the debt before its assignment.
      Debts Paid by Others Certain debts can be excluded from the borrower’s recurring
      monthly obligations and the DTI ratio: When a borrower is obligated on a non-mortgage
      debt - but is not the party who is actually repaying the debt - the lender may
      exclude the monthly payment from the borrower''s recurring monthly obligations.
      This policy applies whether or not the other party is obligated on the debt,
      but is not applicable if the other party is an interested party to the subject
      transaction (such as the seller or real estate agent). Non- mortgage debts include
      installment loans, student loans, revolving accounts, lease payments, alimony,
      child support, and separate maintenance. See below for treatment of payments
      due under a federal income tax installment agreement. When a borrower is obligated
      on a mortgage debt - but is not the party who is actually repaying the debt
      - the lender may exclude the full monthly housing expense (PITIA) from the borrower’s
      recurring monthly obligations if the party making the payments is obligated
      on the mortgage debt, there are no delinquencies in the most recent 12 months,
      and the borrower is not using rental income from the applicable property to
      qualify. In order to exclude non-mortgage or mortgage debts from the borrower’s
      DTI ratio, the lender must obtain the most recent 12 months'' canceled checks
      (or bank statements) from the other party making the payments that document
      a 12-month payment history with no delinquent payments. When a borrower is obligated
      on a mortgage debt, regardless of whether or not the other party is making the
      monthly mortgage payments, the referenced property must be included in the count
      of ﬁnanced properties (if applicable per B2-2-03, Multiple Financed Properties
      for the Same Borrower. Non-Applicant Accounts Credit reports may include accounts
      identiﬁed as possible non-applicant accounts (or with other similar Published
      May 6, 2026 507 notation). Non-applicant accounts may belong to the borrower,
      or they may truly belong to another individual. Typical causes of non-applicant
      accounts include: applicants who are Juniors or Seniors, individuals who move
      frequently, unrelated individuals who have identical names, and debts the borrower
      applied for under a diﬀerent Social Security number or under a diﬀerent address.
      These may be indicative of potential fraud. If the debts do not belong to the
      borrower, the lender may provide supporting documentation to validate this,
      and may exclude the non-applicant debts for the borrower’s DTI ratio. If the
      debts do belong to the borrower, they must be included as part of the borrower’s
      recurring monthly debt obligations. Deferred Installment Debt Deferred installment
      debts must be included as part of the borrower’s recurring monthly debt obligations.
      For deferred installment debts other than student loans, if the borrower’s credit
      report does not indicate the monthly amount that will be payable at the end
      of the deferment period, the lender must obtain copies of the borrower’s payment
      letters or forbearance agreements so that a monthly payment amount can be determined
      and used in calculating the borrower’s total monthly obligations. For information
      about deferred student loans, see Student Loans below. Federal Income Tax Installment
      Agreements When a borrower has entered into or applied for an installment agreement
      with the IRS to repay delinquent federal income taxes, and there is no indication
      that a Notice of Federal Tax Lien has been ﬁled against the borrower in the
      county in which the subject property is located, the lender must obtain the
      following documentation: For installment agreements approved by the IRS a copy
      of the approved IRS installment agreement with the terms of repayment, including
      the monthly payment amount and total amount due; and evidence the borrower is
      current on the payments associated with the tax installment plan. Acceptable
      evidence includes the most recent payment reminder from the IRS, reﬂecting the
      last payment amount and date and the next payment amount owed and due date.
      For installment agreements pending approval by the IRS a copy of the application
      for the installment agreement with the terms of repayment, including the monthly
      payment amount and total amount due. In both cases, if the borrower is not paying
      oﬀ the amount owed in full, the lender must include the monthly payment amount
      as part of the borrower''s monthly debt obligations. If any of the above conditions
      are not met, the borrower must pay oﬀ the outstanding balance due under the
      installment agreement with the IRS in accordance with B3-6-07, Debts Paid Oﬀ
      At or Prior to Closing. The payments on a federal income tax installment agreement
      approved by the IRS can be excluded from the borrower’s DTI ratio if the agreement
      meets the terms in Debts Paid by Others or Installment Debt described Published
      May 6, 2026 508 above. As a reminder, the lender remains responsible under the
      life-of-loan representations and warranties for clear title and ﬁrst-lien enforceability
      in accordance with A2-2-07, Life-of-Loan Representations and Warranties. Garnishments
      All garnishments with more than ten months remaining must be included in the
      borrower’s recurring monthly debt obligations for qualifying purposes. Home
      Equity Lines of Credit When the mortgage that will be delivered to Fannie Mae
      also has a home equity line of credit (HELOC) that provides for a monthly payment
      of principal and interest or interest only, the payment on the HELOC must be
      considered as part of the borrower’s recurring monthly debt obligations. If
      the HELOC does not require a payment, there is no recurring monthly debt obligation
      so the lender does not need to develop an equivalent payment amount. Installment
      Debt All installment debt that is not secured by a ﬁnancial asset—including
      student loans, automobile loans, personal loans, and timeshares—must be considered
      part of the borrower’s recurring monthly debt obligations if there are more
      than ten monthly payments remaining. However, an installment debt with fewer
      monthly payments remaining also should be considered as a recurring monthly
      debt obligation if it signiﬁcantly aﬀects the borrower’s ability to meet their
      credit obligations. See below for treatment of payments due under a federal
      income tax installment agreement. Note: A timeshare account should be treated
      as an installment debt regardless of how it is reported on the credit report
      or other documentation (that is, even if reported as a mortgage loan). Lease
      Payments Lease payments must be considered as recurring monthly debt obligations
      regardless of the number of months remaining on the lease. This is because the
      expiration of a lease agreement for rental housing or an automobile typically
      leads to either a new lease agreement, the buyout of the existing lease, or
      the purchase of a new vehicle or house. Rental Housing Payment The housing payment
      for each borrower’s principal residence must be considered when underwriting
      the loan. For the following scenarios, the borrower’s monthly rental housing
      payment must be evaluated (if the borrower does not otherwise have a mortgage
      payment or no housing expense): for non-occupant borrowers, and Published May
      6, 2026 509 for second homes or investment properties. The following list provides
      examples of acceptable documentation to verify the rental payment: six months
      canceled checks or equivalent payment source; six months bank statements reﬂecting
      a clear and consistent payment to an organization or individual; direct veriﬁcation
      of rent from a management company or individual landlord; or a copy of a current,
      fully executed lease agreement and two months canceled checks (or equivalent
      payment source) supporting the rental payment amount. Note: Refer to B3-5.4-03,
      Documentation and Assessment of a Nontraditional Credit History for rental payment
      history requirements when using non-traditional credit. Loans Secured by Financial
      Assets When a borrower uses their ﬁnancial assets—life insurance policies, 401(k)
      accounts, individual retirement accounts, certiﬁcates of deposit, stocks, bonds,
      etc.—as security for a loan, the borrower has a contingent liability. The lender
      is not required to include this contingent liability as part of the borrower’s
      recurring monthly debt obligations provided the lender obtains a copy of the
      applicable loan instrument that shows the borrower’s ﬁnancial asset as collateral
      for the loan. If the borrower intends to use the same asset to satisfy ﬁnancial
      reserve requirements, the lender must reduce the value of the asset (the account
      balance, in most cases) by the proceeds from the secured loan and any related
      fees to determine whether the borrower has suﬃcient reserves. Note: Payment
      on any debt secured by virtual currency is an exception to the above policy
      and must be included when calculating the debt-to-income ratio. Open 30–Day
      Charge Accounts Open 30–day charge accounts require the balance to be paid in
      full every month. Fannie Mae does not require open 30–day charge accounts to
      be included in the debt-to-income ratio. See B3-6-07, Debts Paid Oﬀ At or Prior
      to Closing, for additional information on open 30–day charge accounts. Other
      Real Estate Owned—Qualifying Impact For details regarding the qualifying impact
      of other real estate owned, see B3-6-06, Qualifying Impact of Other Real Estate
      Owned. Revolving Charge/Lines of Credit Revolving charge accounts and unsecured
      lines of credit are open-ended and should be treated as long-term debts and
      must be considered part of the borrower''s recurring monthly debt obligations.
      These tradelines include credit cards, department store charge cards, and personal
      lines of credit. Equity lines of credit secured Published May 6, 2026 510 by
      real estate should be included in the housing expense. If the credit report
      does not show a required minimum payment amount and there is no supplemental
      documentation to support a payment of less than 5%, the lender must use 5% of
      the outstanding balance as the borrower''s recurring monthly debt obligation.
      For DU loan caseﬁles, if a revolving debt is provided on the loan application
      without a monthly payment amount, DU will use the greater of $10 or 5% of the
      outstanding balance as the monthly payment when calculating the total debt-to-income
      ratio. Student Loans If a monthly student loan payment is provided on the credit
      report, the lender may use that amount for qualifying purposes. If the credit
      report does not reﬂect the correct monthly payment, the lender may use the monthly
      payment that is on the student loan documentation (the most recent student loan
      statement) to qualify the borrower. If the credit report does not provide a
      monthly payment for the student loan, or if the credit report shows $0 as the
      monthly payment, the lender must determine the qualifying monthly payment using
      one of the options below. If the borrower is on an income-driven payment plan,
      the lender may obtain student loan documentation to verify the actual monthly
      payment is $0. The lender may then qualify the borrower with a $0 payment. For
      deferred loans or loans in forbearance, the lender may calculate a payment equal
      to 1% of the outstanding student loan balance (even if this amount is lower
      than the actual fully amortizing payment), or a fully amortizing payment using
      the documented loan repayment terms. Recent Related Announcements The table
      below provides references to recently issued Announcements that are related
      to this topic. Announcements Issue Date Announcement SEL-2026-05 May 06, 2026
      Announcement SEL-2026-02 March 04, 2026 Announcement SEL-2022-04 May 04, 2022
      Announcement SEL-2020-07 December 16, 2020 Announcement SEL-2020-01 February
      05, 2020 Published May 6, 2026 511 Announcements Issue Date Announcement SEL-2019-09
      December 04, 2019 Announcement SEL-2019-08 October 02, 2019'
  judgment: false
