TIMESHARES
Short answer
Lenders typically count a timeshare loan as an installment debt in your debt-to-income ratio, so it can change how much home you qualify for. How it is treated can vary by loan program and lender.
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Sometimes the most common questions with the most common answers are not fully understood.
Today I want to clarify the rules and guidelines behind timeshares and how they impact mortgages.
TOP QUESTIONS ASKED ABOUT TIMESHARES:
Q: WHAT TYPE OF DEBT IS A TIMESHARE CONSIDERED?
A: All products except USDA state it is classified as an installment debt.
USDA is silent on the topic and most lenders consider installment debt.
Q; IS A TIMESHARE CONSIDERED IN THE TOTAL NUMBER OF PROPERTIES OWNED?
A: Fannie Mae & Freddie Mac – It is NOT considered in total properties owned.
FHA, VA & USDA do not have a guideline pertaining to this.
USDA will do a purchase if you have a timeshare.
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Q: IS PAYMENT COUNTED IN DTI?
A: Yes, payment is counted in the Debt to income ratio is the same as an installment loan on all products.
It is not listed under the Schedule of Real Estate. Just under a regular installment loan.
Q: ARE MAINTENANCE FEES COUNTED IN DTI?
A: Unlike escrow items for a regular mortgage the maintenance fees are not counted in the DTI.
Government loans are silent on the topic, and we have never counted in Debt to income ratio.
Q: DOES OWNERSHIP IMPACT 1ST TIME HOMEBUYER STATUS?
A: Freddie Mac states it does not impact 1st time homebuyer status.
Fannie MAe is silent on the topic. We say it does not. It is lender discretion.
Government loans have no guidelines although 1st time homebuyers do not impact those products.
Q: HOW IS DEROGATORY TIMESHARE CREDIT CONSIDERED?
A: Derogatory on timeshare credit is considered the same as installment debt.
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