## Will EIDL Loan Affect Mortgage Approval?
An Economic Injury Disaster Loan (EIDL) is a federal loan program designed to provide financial assistance to businesses and non-profit organizations that have been negatively impacted by the COVID-19 pandemic. The EIDL program is administered by the Small Business Administration (SBA).
**How can I use EIDL funds?**
EIDL funds can be used for a variety of purposes, including:
* Payroll
* Rent or mortgage payments
* Utility bills
* Other operating expenses
**Will an EIDL loan affect my mortgage approval?**
The answer to this question is: it depends.
**If you are applying for a new mortgage**
If you are applying for a new mortgage, an EIDL loan may affect your approval in two ways:
1. **Debt-to-income ratio:** An EIDL loan will increase your debt-to-income ratio (DTI), which is the percentage of your monthly income that goes towards paying off debt. Lenders typically prefer to approve borrowers with DTI ratios below 36%. If your DTI ratio is too high, the lender may deny your mortgage application.
2. **Income verification:** Lenders will typically require you to provide proof of income when you apply for a mortgage. If you are using EIDL funds to cover payroll or other operating expenses, the lender may need to see additional documentation to verify your income.
**If you have an existing mortgage**
If you have an existing mortgage, an EIDL loan may affect your ability to make mortgage payments. If you are using EIDL funds to cover mortgage payments, the lender may be able to work with you to modify your loan terms.
**What should I do if I am concerned about EIDL loan affecting my mortgage approval?**
If you are concerned about how an EIDL loan may affect your mortgage approval, you should talk to your lender. The lender can provide you with more information about their specific requirements and help you determine how an EIDL loan may impact your mortgage application.
**Additional information**
In addition to the information above, here are some other things to keep in mind:
* **EIDL loans are not considered income.** This means that the lender will not count EIDL funds as income when they are calculating your DTI ratio.
* **EIDL loans are reported to credit bureaus.** This means that an EIDL loan may appear on your credit report, which could affect your credit score.
* **EIDL loans may be forgiven.** If you meet certain criteria, the SBA may forgive your EIDL loan. If your EIDL loan is forgiven, it will not affect your credit score.
**Conclusion**
An EIDL loan may affect your mortgage approval, but the impact will vary depending on your individual circumstances. If you are concerned about how an EIDL loan may affect your mortgage approval, you should talk to your lender.