When can real estate taxes be disregarded for the purpose of determining debt ratios?

Real estate taxes are a critical component in assessing a borrower's financial obligations and determining their debt-to-income ratios. These taxes reflect a borrower's financial responsibilities and can significantly impact the ability to repay a mortgage.

In most underwriting processes, lenders require a thorough evaluation of all recurring expenses, including real estate taxes, to assess the borrower's financial health. Since these taxes are a predictable and often substantial expense, they cannot be simply disregarded when calculating debt ratios. This ensures a more accurate representation of the borrower's overall debt obligations.

Therefore, real estate taxes must consistently be taken into account to provide a clear picture of the borrower’s financial situation, allowing lenders to make informed lending decisions.