For a Fannie Mae loan, a revolving credit card has a $3,400 outstanding balance. The credit report shows no required minimum payment, and no supplemental documentation supports a payment below 5% of the balance. What monthly obligation should be used?
Correct Answer
B) Use 5% of $3,400, or $170 per month
B. Use a $170 monthly obligation. $3,400 × 0.05 = $170. An absent reported payment does not mean an outstanding revolving debt has no qualifying payment. Scope and exceptions: Supplemental payment documentation can affect the calculation. DU uses the greater of $10 or 5% when revolving debt is entered without a payment; this balance still yields $170. This is an underwriting guideline, not a universal federal minimum-payment rule. Source: Revolving Charge/Lines of Credit — https://selling-guide.fanniemae.com/sel/b3-6-05/monthly-debt-obligations
Why This Is the Correct Answer
B. Use a $170 monthly obligation. $3,400 × 0.05 = $170. An absent reported payment does not mean an outstanding revolving debt has no qualifying payment. Scope and exceptions: Supplemental payment documentation can affect the calculation. DU uses the greater of $10 or 5% when revolving debt is entered without a payment; this balance still yields $170. This is an underwriting guideline, not a universal federal minimum-payment rule.
Why the Other Options Are Wrong
Option A: Use nothing, because no payment is shown on the credit report
It ignores the required fallback.
Option C: Use $34, a flat 1% of the balance set by federal regulation
One percent is not the applicable fallback.
Option D: Use the full $3,400 balance as the monthly obligation instead
The outstanding balance is not the recurring monthly payment.
Exam Tip
Use the documented payment or the applicable program fallback—not zero.
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