FHA & VA loans do not *include* the deferred student loans in your debt to income ratio as long as they'll be deferred for the first 12 months of the mortgage - this means you need something in writing from the creditor stating when the repayment date beings/deferment date ends. It can't be ambiguous like "6 months after graduation", etc.
If you were seeking out conforming financing, or USDA financing, then if you set your student loan payments up on an income-based repayment plan then that payment will be included in qualifying, and if your income isn't very high then the income-based payment should be relatively low compared to what the normal amount would be, and so that would help lower your debt to income ratio.
Student loans are long term debt obligations that must be
included in the debt ratio per section 1980.345(c)(1).
Student loans that are currently in repayment must have documentation to verify the
current payment due (e.g. letter from a loan services, online account verification's, or
other official written documentation). The credit report alone is not acceptable
documentation. Verification are valid for 120 days, 180 days for new construction.
A fixed loan payment will not adjust over the repayment term. The payment listed
on the documentation may be used for debt ratios.
âˆš âˆš âˆš Student Loans: Graduated Payments for USDA Loans
Graduated repayment plans typically start with low payments and then adjust every
12 months or more. Regardless of when payment adjustments occur, lenders must
utilize the highest payment documented on the repayment plan agreement in debt
âˆš âˆš âˆš y Student Loans: Deferred for Ky USDA Loans
Deferred student loans that are not in repayment status may use an estimated
payment of 1% of the loan balance reflected on the credit report, or a verified fixed
payment provided by the loan servicer to document the payment that will be due
once deferment ends.
âˆš âˆš âˆš Student Loans: Income Based Repayment (IBR) for KY USDA Loans
IBR amounts are not fixed payments and may increase
IBR payments of $0 are not eligible to be used in the debt ratio. The applicant must
provide documentation of the IBR payment plan from the loan servicer. The
1. If the IBR payment is less than $100 and 1 percent of the total loan balance
is more than $100, a minimum payment of $100 must be included in the
2. If the IBR payment is less than $100, and 1 percent of the total loan
balance is less than $100, a minimum payment of 1% of the loan balance
must be included in the debt ratios.
3. If the current IBR payment is over $100, use that payment amount in the
Joel Lobb (NMLS#57916)
Senior Loan Officer
Key Financial Mortgage Co. (NMLS #1800)*
107 South Hurstbourne Parkway*
Louisville, KY 40222*