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Can I Get A House With Student Debt With A Mortgage

ByGustan Cho
This Article Is About Can I Get A House With Student Debt With A Mortgage Many first time home buyers with high student loans often ask the question Can I Get A House With Student Debt. Student debt and auto loans are two of the major barriers homebuyers face. Every loan program has its own mortgage guidelines when it comes to student debts. With the exception of VA loans, deferred student loans are no longer exempt when it comes to debt to income ratio calculations. This holds true even if the student loans are deferred for longer than 12 months. However, Gustan Cho Associates are experts in helping homebuyers with high student debts. The only loan program that accepts income-based repayment (IBR) are conventional loans. The answer to the question Can I Get A House With Student Debt is absolute YES. Over 83 percent of potential homebuyers between the ages of 22 to 35 are not buying a home due to student loan debts. Educating oneself on student debt guidelines in getting a mortgage is important for first-time homebuyers.

Can I Get A House With Student Debt And Qualify For A Mortgage

Student loan debt is affecting many Americans in realizing the dream of homeownership become a reality.
  • High outstanding student loan debts affect debt to income ratios
  • Closing to 50 million Americans carries student loan debt
  • The average student loan borrower owes an average of $30,000, according data by the Student Loan Hero
  • According to the National Association of Realtors, 20% of those with student loan debt carry an outstanding balance of greater than $100,000
  • Many have their student debts in deferment status
What this means is they do not have to pay on their student loan debts until at a later date when their finances are better. Others may have their student debts in a zero income-based repayment plan.

Data On Consumers With Student Loan Debts

Michael Gracz of Gustan Cho Associates said the following: Student loan debt is one of the biggest hurdles in obtaining a mortgage for borrowers with high debt to income ratios.

FHA And USDA Agency Mortgage Guidelines On Student Loan Debts

Both FHA and USDA loans have the same mortgage agency guidelines on student debt.
  • Deferred student loans no longer are exempt on FHA and USDA loans
  • This holds true even though the student loans are in deferment for longer than 12 months
  • Income-based repayment (IBR Repayments) are not allowed on FHA and USDA loans
  • This holds true even though the IBR payment is zero ($0)
  • FHA and USDA require mortgage underwriters to take 1 percent of the outstanding student loan balance and use that figure as a hypothetical monthly payment on DTI calculations
  • This applies to deferred student loans and IBR payments
  • The second option is for the borrower to contact their student loan provider and get a fully monthly amortized payment over an extended term
Most extended-terms on student loans is 25 years. This monthly fully amortized payment needs to be in writing by the student loan provider.

Can I Get A House With Student Debt With A VA Mortgage?

VA loans exempt deferred student loans that are in deferment longer than 12 months.
  • Mortgage underwriters do not have to take a percentage of the outstanding student loan balance and use it as a monthly hypothetical debt on deferred student loans that are in deferment longer than 12 months
  • On non-deferred student loans, mortgage underwriters need to take 5 percent of the outstanding student loan balance and divide that figure by 12
  • The resulting figure will be the figure used as the monthly hypothetical debt when calculating the borrower’s debt to income ratios
  • The second option is for the borrower to contact their student loan provider and get a fully monthly amortized payment over an extended term
  • This figure needs to be in writing by the student loan provider

Fannie Mae And Freddie Mac Student Loan Guidelines

Conventional loans are the only loan program that allows income-based repayment.
  • Otherwise, 1 percent of the outstanding student loan balance is used as the monthly hypothetical debt by mortgage underwriters when calculating the borrowers’ debt to income ratio
  • The second option is for the borrower to contact their student loan provider and get a fully monthly amortized payment over an extended term
  • This figure needs to be in writing by the student loan provider
  • Defer student loans are not exempt from debt to income ratio calculations on conventional loans
Non-QM loans do exempt deferred student loans as long as the deferment is longer than 12 months.

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