I need help on this, I've read 1026.43(c)(5)(ii) backwards and forwards about balloons and interest only and am still not sure on the following scenario:

1. Borrower is requesting 80% LTV on purchase of new primary residence with 10% cash down payment and 10% seller contract.
2. Terms of the seller contract are 6 years term, 6% interest, no payments, balance of principal and interest due at maturity.

For ATR, should include a payment for the seller contract calculated for the loan balance at 6% interest amortized over 6 years?

While interest only subordinate financing is not really addressed, I would say based on the entirely of the regulation and commentary it would require you to consider a fully amortizing payment over the 6 years within their DTI.