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Monthly Payments
(After Tax Dollars)

Next, the lender will look at your monthly payments.
On a separate piece of paper, list all of your monthly payments.

CALCULATING MONTHLY INSTALLMENT PAYMENTS
Installment loans are loans that have a fixed loan amount and a fixed number of payments.

Examples of installment loans are auto loans, mortgage loans, or other loans made to purchase a specific asset.

REVOLVING LOAN PAYMENTS
Next, list all "Revolving" loans. Revolving loans typically have credit limits rather than a specified loan amount, and have no specified loan term.

Revolving loans could go on forever as long as the terms of the loan are met, and the borrower continues to utilize the account.

Examples of revolving loans are major credit cards and department store charge cards.

CALCULATING MONTHLY DEBT
Ignore any payments that go away with the purchase of your home (ie rent, mortgages, (if you will have sold your existing home by the closing on your new home,) etc. Also ignore utility payments.

In a column next to each loan, list the monthly payment of each installment loan, or the minimum payment of each revolving loan. Total these payments.

Some lenders will allow you to exclude installment payments from the total if there are 10 or less payments remaining.

For Example:

INSTALLMENT DEBT CREDITOR: Monthly Payments      # Payments Remaining XYZ Finance Co. (His Car) $230 8 ABC Finance Co. (Her Car) 152 45 Moon Appliance Co. (TV) 35 11 REVOLVING DEBT Passport Card 90 Try 'N Save Dept. Store 60 Acme Charge Card 100 ACTUAL DEBT $ 667 CALCULATED DEBT $ 402 See Explanation Below

• His car payment has been ignored
  because there are less than 10 payments remaining.

• The Moon Appliance Co. payment has also been ignored
  because this couple will have paid it down to less than 10 payments by the time their first mortgage payment is due.