When Someone Else Pays The Debt
A loan with your name on it does not have to count against you if you can document that another party has been paying it.*
A debt with your name on it can be left out of your ratio when you can prove somebody else has been paying it
The proof is canceled checks or bank statements, and the window is 6 or 12 months depending on the program
- When you are obligated on a debt but are not the party repaying it, that payment may be excluded from your monthly obligations
- Non-mortgage debt needs 12 months of canceled checks or bank statements from the party making the payments*
- Mortgage debt is stricter, the payer has to be obligated on that mortgage and the account needs 24 months with no delinquencies*
- At least one program excludes a debt after another party has paid it in a satisfactory manner for the past 6 months*
- The other party cannot be an interested party to the transaction, such as the seller or the realtor
- A work vehicle can be excluded when the expense is evident on your business financials*
Proof that another party pays can remove the debt
Canceled checks or bank statements are the proof
A business paid vehicle can come off your ratio
Mortgage debt carries a longer clean history window
Court ordered debts can be excluded with the decree
A debt paid off at closing can be excluded
What is the Saxton Debt Paid By Others Home Loan?
A purchase or refinance where a documented debt that somebody else pays is left out of your qualifying ratio
The Saxton Debt Paid By Others Home Loan is a purchase or refinance where a debt in your name is left out of the ratio you are qualified on, because another party has been making the payments. The rule behind it is short. When a borrower is obligated on a debt but is not the party who is repaying the debt, the payment may be excluded from the borrower’s recurring monthly obligations. Documentation is what turns that rule into an approval.
Most people in this position did a favor once. You co-signed a car for a child, stayed on a loan a parent covers, or kept your name on a mortgage after a divorce. The account still reports on your credit, and it still counts against you until you address it. The same thing happens when your company pays the note on a work truck. The payment is real, but it is not leaving your pocket.
This does not run on a promise. You need canceled checks or bank statements from the other party covering the full window, and the account has to be clean across that window. The party paying cannot be an interested party to the transaction, such as the seller or the realtor. And a debt assigned to somebody else is still yours until the creditor releases you from the obligation. Exclusion changes the ratio, not the liability.
Why choose the Saxton Debt Paid By Others Home Loan?
This is for the borrower who is legally on a debt that somebody else actually pays and wants it out of the debt ratio.
Someone Else Pays It
When you are obligated on a debt but are not the party who is repaying it, that payment may be excluded from your recurring monthly obligations. It does not matter much whether the account is a card, a car, or a mortgage. What matters is who has actually been sending the money each month, and whether you can put that in front of an underwriter.
Twelve Months Of Proof
The usual window is 12 months. You provide 12 months of canceled checks or bank statements from the other party making the payments, and the account has to show no delinquency over that same period. At least one program words it as evidence of timely payments made by the primary obligor for the most recent 12 months, with no history of late payments on the account.
Mortgage Debt Is Stricter
A mortgage somebody else pays is held to a higher standard than a car loan. The party making the payments has to be obligated on that mortgage debt too, and the account needs 24 months with no delinquencies instead of 12. If the person paying is not on the loan with you, this route is closed and the payment stays in your ratio.
Your Business Pays It
A vehicle loan can be excluded when it ties to business related activity and you show 12 months of proof that the business pays it, with no payment ever 30 days late. The expense has to be evident on the business financials. Under at least one program the borrowing entity has to be an individual rather than the company itself.
A Court Assigned Debt
When an outstanding debt was assigned to another party by court order, such as under a divorce decree or separation agreement, at least one program does not require that liability to be counted in your recurring monthly debt obligations. A copy of the court order goes in the file. For mortgage debt, you also provide the document transferring ownership of the property.
Still On The Hook
You have a contingent liability when an outstanding debt obligation has been assigned to another party, but the creditor has not released you from the obligation. The account keeps reporting and the responsibility keeps being yours. Exclusion is a ratio decision, not a release. Under at least one program, a contingent liability comes out only with proof that you are not the primary obligor.
Hear From Homeowners Like You
Frequently Asked Questions
Seven questions borrowers ask when a debt in their name is paid by somebody else.
A family member, an ex-spouse, your business, or another entity can be the party paying. The one hard stop is an interested party to the transaction. If the person covering the debt is the seller or the realtor, this policy is not applicable and the payment stays in your ratio, no matter how clean the history looks. That line exists so the sale itself cannot fund your qualification.
Sometimes. At least one program will exclude a debt from the ratio when it is being paid in a satisfactory manner by another party for the past 6 months. Others hold the line at 12 months, and mortgage debt runs to 24 months. Bring the history you actually have. The shorter window is program specific, so the file gets placed where the documentation you can produce fits the rule.
Under at least one program, yes. Contingent liabilities may only be excluded from the ratio with proof that you are not the primary obligor. That is a different test from proving somebody paid the bill. It looks at how the account is structured, not just who wrote the checks. Other programs accept the payment history on its own, which is why the same file can work in one place and not another.
The divorce decree, separation agreement, or court order that shows the transfer of ownership, and the obligation in question has to be current. A past due account cannot be excluded on the strength of a court order alone. For mortgage debt, a copy of the document transferring ownership of the property is required as well. Any liability tied to a separation or divorce needs the court documentation in the file.
Yes, under at least one program. Installment and revolving debt paid at closing may be excluded from the debt-to-income ratio with one of the following: a credit supplement, verification from the creditor that the liability is paid in full, or evidence of the payoff on the Closing Disclosure. One of the three is enough. Decide on this early, because it changes how the file is structured.
Usually it does. Non-mortgage debt requires no delinquency on the account over the past 12 months. Mortgage debt requires no delinquencies in the past 24 months. A business paid vehicle needs 12 months with no payment 30 days late. There is no partial credit on these tests. If the party paying let the account slip inside the window, the payment goes back into your ratio and you qualify with it.
They do. One jumbo program simply says to follow agency guidelines. Others write their own conditions on the payment window, the documents, and who the payer is allowed to be. Who pays, how long they have paid, and what you can prove are what decide where the file belongs. Nothing here is a decision on your loan until an underwriter reviews the actual documents.
Find out what you qualify for
If a debt in your name is being paid by somebody else, start pulling the last 12 months of canceled checks or bank statements from the person paying it. That one step often decides whether the payment counts against you at all. Get a fast, no-obligation pre-qualification today.
Get Pre-Qualified*Loan amounts, rates, terms, and down payment requirements are subject to credit approval, income and asset verification, and program eligibility. Rural housing financing is governed by USDA area loan limits and income limits rather than by conforming loan limits. Down payment and cash-out limits vary by occupancy, credit score, and documentation type. Not all applicants will qualify. Saxton Mortgage, LLC is an Equal Housing Lender.