Patrick's Quick Answer
Here's the key: when Ursula the Underwriter runs your debt-to-income ratio, only certain monthly payments count. Your utility payments, your car and home insurance payments, and your phone payments do not count. Your installment payments like an auto loan, your student loans, and your revolving credit card payments do count. And student loans count even in deferment or forbearance.
Which monthly bills count as debt for a mortgage comes down to one question: is it a loan you signed for, or a bill you pay to live? Loans and cards count. Utilities, insurance and the phone bill do not. That split drives your debt-to-income ratio.
What does not count
The list of payments Ursula ignores surprises buyers, because these are the biggest regular bills in the house. Utility payments do not count. Car insurance and home insurance payments do not count. Phone payments do not count. None show up on your credit report as obligations, so none go into the debt side of the math. They still matter for your monthly budget, but they are not debt in the underwriting sense.
What does count
Now the side that moves the needle. Ursula counts your installment payments: an auto loan, or any other installment debt with a fixed payment and a fixed end date. She counts your student loan payments. And she counts your revolving credit payments, your credit cards. These are contractual obligations on your credit report, and that is how she finds them. When Lawrence adds up your monthly debt obligations, this is the column he is adding.
The student loan gotcha
Here is the one that trips up buyers every year: student loans count even in deferment or forbearance. Deferred does not mean forgotten. The debt is still there while the payments are paused, so it gets counted. Do not get six months into the process and get blindsided by a student loan you thought did not matter because you were not paying it.
Reality Bites
The phone bill will not sink your approval. The truck you financed three months before you applied might. Buyers get tripped up in both directions: they trim subscriptions and feel great while a forgotten auto loan does the real damage. The debt side of your ratio is built from your credit report, not from what feels expensive in your monthly budget, so run the report, not the feeling.
Patriot Pro Tip
Before your first call with Lawrence, pull your own credit report and write down every monthly payment on it. Sort them into two columns: loans and cards in one, everything else in the other. The first column is what the underwriter counts, and if anything in it surprises you, find out now, months before the offer, not the week before closing.
Understanding what counts as debt is part of the financial foundation I walk first-time buyers through in my free live webinar, where I teach the entire roadmap from getting your income and debt ready to getting your keys. If you are not sure how your monthly payments look to the underwriter, book a free call and we will break down your numbers first.