Mortgage Navigator • Conventional • Debts & DTI
Paying debt off to qualify
Debt payoff can lower DTI, but the lender still has to document the payoff and evaluate where the money came from.
Fannie installment payoff
Installment loans paid off or paid down to ten or fewer remaining payments generally do not need to be included as long-term debt, subject to the significant-impact analysis.
Fannie revolving payoff
A revolving balance paid off at or before closing can generally have its monthly payment excluded from DTI.
Freddie source of funds
Freddie requires the lender to document the source of funds used to pay off or pay down an existing debt for qualification and ensure those funds meet asset eligibility requirements.
Strategy matters: paying down the wrong account can consume reserves without improving AUS enough to help. DTI optimization should be modeled before money moves.
Official guide baseline
Fannie Mae Selling Guide · Freddie Mac Seller/Servicer Guide
Debt treatment can change with documentation, remaining term and AUS feedback. Current agency guide controls.