There is a growing trend among lenders to include cell phone bills as debt in the calculation of DTI. I believe this trend is partially due to the fact that most peoples’ cell phones are on monthly contracts at fixed monthly payment amounts. The cost is included in DTI, whether it is for service, usage, equipment, or a combination of these fees.
Cell phones used to be considered a “utility” bill like electricity and water. Cell phone bills varied every month because of roaming charges and other features. Utility bills vary, too and do not appear on commercial credit reports. These items have historically never been considered when figuring DTI.
Another reason cell phone bills are included in the DTI calculation may be because their payment histories are now on credit reports. Besides reporting on how well people meet their monthly payment commitment, cell phone companies report on collection activities when people drop their service without paying cancellation fees.
Mortgage lenders are including cell phone amounts as reported in credit reports in DTI. And a poor payment history reflects in the borrower's ability to qualify. It’s just one more thing that makes it more difficult to qualify a prospective borrower.
I won't be surprised when internet service bills become part of the qualification process, too. Think how many people have standard monthly payments for wireless connectivity to the net. And, how many quit the service without paying cancellation charges or their final bill? These factors bring internet bills one step closer to being part of mortgage loan qualification. Any bets on how soon this happens?