Revolving charge accounts with outstanding balances are considered long-term liabilities if the borrower will continue to use the account. For debt-to-income qualification purposes, the lender will use the minimum monthly payment reported by the creditor. The minimum monthly payment on most credit card bills is typically calculated at 3% of the current balance.
If the creditor does not indicate a minimum payment, the lender's underwriter will calculate five percent (5%) of the account balance (after adjusting for any planned pay down of the balance from the loan proceeds) as the monthly payment amount.
Revolving credit tends to be the most prevalent among Americans. Mortgage loan processors and underwriters do not give revolving accounts as much weight as installment loans. So when grading credit, mortgage lenders allow a few late payments on revolving accounts.
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