Which item is not considered when evaluating a borrower's Ability to Repay?

Which item is not considered when evaluating a borrower's Ability to Repay?

• A. Property Value
• B. Alimony
• C. Child Support
• D. Part time income

Answer: (A)

Evaluating Ability to Repay focuses on the borrower's cash flow—the income available to cover the mortgage and existing obligations. Lenders look at stable, verifiable income sources and ongoing obligations to determine how much payment the borrower can afford each month. Alimony and child support count as income if there is a legal obligation and the payments are likely to continue, and even part-time income can be included if it’s verifiable and stable. What doesn’t factor into the Ability to Repay calculation is the value of the property itself. Property value is used to assess collateral risk and loan-to-value, not to determine the borrower's monthly payment capability. So, property value isn’t part of ATR, while alimony, child support, and stable part-time income are.

Evaluating Ability to Repay focuses on the borrower's cash flow—the income available to cover the mortgage and existing obligations. Lenders look at stable, verifiable income sources and ongoing obligations to determine how much payment the borrower can afford each month. Alimony and child support count as income if there is a legal obligation and the payments are likely to continue, and even part-time income can be included if it’s verifiable and stable. What doesn’t factor into the Ability to Repay calculation is the value of the property itself. Property value is used to assess collateral risk and loan-to-value, not to determine the borrower's monthly payment capability. So, property value isn’t part of ATR, while alimony, child support, and stable part-time income are.