What Is Considered Debt When Applying For A Mortgage?
When you apply for a mortgage, your lender will pull your three credit reports, one each from the national credit bureaus of Experian™, Equifax® and TransUnion®. These reports will list your outstanding loan and credit card balances.
The debts listed on these reports are the ones that your lender will consider when determining whether you can afford to repay a mortgage. Your lender will consider these debts when calculating, too, how big of a mortgage loan, and how large of a monthly payment, you can comfortably afford.
Mortgage Payments
Your mortgage payments – whether for a primary mortgage or a home equity loan or other kind of second mortgage – typically rank as the biggest monthly debts for most people. If you are applying for a new loan, your mortgage lender will include your estimated monthly mortgage payment in its calculation of your monthly debts.
Loan Payments
Mortgage lenders also consider any other recurring loan payment as part of your monthly debt. This includes the payments you make each month on auto loans, student loans, home equity loans and personal loans.
Credit Card Payments
Lenders look at your credit card debt, too. They will use the total minimum required payments that you must make each month on your credit cards to determine your monthly credit card debt.
Alimony And Child Support Payments
If you are divorced, you might make monthly alimony or child support payments. Lenders also consider these payments as part of your monthly debt because you must make them each month, even after you add a mortgage loan payment to your expenses.
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