Interest-only (IO) programs configuration and qualifying calculation

How to configure IO programs and their qualifying calculations for DTI

The example below shows a 40-year fixed program, with the first 10-year being interest-only / IO.   These are the field values:

  • The "Amortization Due" field holds the total number of months a note is due;
  • The "Amortization Term" is the term on which the amortization payments are based;
  • "Interest Only Term"  holds the months for the IO payments;
  • "Qualify Payment Type" has both Principal and Interest (PI) and IO calculation options.  If PI is selected, the qualifying monthly PI is calculated based on the difference between "Amortization Term" and "Interest Only Term" in the DTI calculation. 
    • In this example, it is 360 months.  (480-120)
    • This field was not available prior to June 2022, therefore all IO programs were calculating and qualifying based on IO payments (with adj factor if ARM) only.