Student Loans & Loan Programs – What matters?

15488097_m

 

Student loans can have a great effect on your home purchase and can impact your decisions and mortgage differently depending on what type of loan program you chose.

 

According to Goldman Sachs Group Inc. College graduates who carry over $25,000 in total student loan debt are less likely to own a home than their counterparts with less financial burden. If you have any student loan debt whatsoever that can affect your choice in loan programs. My team and I can guide you through the process with a personal touch. Get in touch with us now to take a look at your options and get the process started. CLICK HERE to contact us and take your first steps toward pre-qualification.

Below is a quick guidline for individual loan programs:

PROGRAM

GUIDELINE

FNMA

For all student loans, whether deferred, in forbearance, or in repayment (not deferred), the lender must use the greater of the following to determine the monthly payment to be used as the borrower’s recurring monthly debt obligation:

  • 1% of the outstanding balance; or
  • The actual documented payment (documented in the credit report, in documentation obtained from the student loan lender, or in documentation supplied by the borrower).

 

If the payment currently being made cannot be documented or verified, 1% of the outstanding balance must be used.

Exception: If the actual documented payment is less than 1% of the outstanding balance and it will fully amortize the loan with no payment adjustments, the lender may use the lower, fully-amortizing monthly payment to qualify the borrower.

FHLMC

Use the following:

  • The payment on the credit report
  • 1% of the outstanding balance or
  • The actual documented fully amortizing payment.

FHA

If the actual monthly payment is 0 or is not available use 2% of the outstanding balance to establish the monthly payment.

 

VA

May be excluded from the borrower’s total monthly obligations with evidence of a minimum of 12 months deferment from date of closing.

 

If there is no monthly payment reflected on the credit report, a copy of the borrower’s payment letter or promissory note should be used to determine what payment amount to use.

USDA

Fixed payment loans:  A fixed payment may be used in the debt ratio when the lender retains documentation to verify the payment is fixed, the interest rate is fixed, and the repayment term is fixed.  There must be no future adjustments to the terms of the student loan payments. 

 

Non-Fixed payment loans:  Payments for deferred loans, Income Based Repayment (IBR), Graduated, Adjustable, and other types of repayment agreements which are not fixed cannot be used in the total debt ratio calculation.  One percent of the loan balance reflected on the credit report must be used as the monthly payment.  No additional documentation is required.