Income based repayment of student loans and getting a conventional mortgage

Asked by Twofamilyhelp, Massachusetts Sat Mar 3, 2012

I am hoping to get financing for a condo. I am self-employed (over 2 years) and don't have a high income, but I do want to put down a 30% down payment and have years worth of liquid reserves. My credit is over 700. My only problem is this: I have graduate student loans that will be due starting in 2014. My understanding is that when calculating for a conventional mortgage these loans will be amortized at 5% a month. However, I won't actually be paying that much. I will be doing income based repayment where the amount of the student loan payment will be based on the income I make. If the loans were due today I would have a payment of $0 per month. Is there a mortgage lender that would count them at $0 a month aside from FHA? I can not do FHA because the condo is not FHA approved. I would appreciate it if someone with experience with income based repayment student loans could help me out.

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Rob Weber, Mortgage Broker Or Lender, Plainfield, IL
Mon Mar 5, 2012
The underwriter will have to use some number to calculate your debt payment and if she knows your repayment won't be fixed, you'll probably get hit with the 5% number, hopefully no higher. This up to the underwriter's discretion how to calculate it. You may want to get your student loan servicer to issue some type of statement to give the underwriter a better idea of how to calculate the monthly debt for the loan.
3 votes
Deborah Garv…, Mortgage Broker Or Lender, San Diego, CA
Mon Mar 5, 2012
I always have my borrowers contact their student loan servicer to get actual payment amounts and it has always been less than the 5% used by underwriting. I would encourage you to contact Andrew as well. Best to you!
1 vote
Gregorio Den…, , San Diego, CA
Mon Mar 5, 2012
Do the student loans show a minimum payment on your credit report?
0 votes
Heidi Zizza, Agent, Framingham, MA
Mon Mar 5, 2012
I would call Andrew below he can help you
0 votes
Cathy Meyer, Agent, Worcester, MA
Sun Mar 4, 2012
Your best bet is to talk to a couple of mortgage brokers. They will give you the true answer. I have the names of a couple of great mortgage brokers who will be happy to answer your questions.Give me a call at 508-864-1117 and I will give them to you.Good Luck!
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0 votes
Andrew Adams, , 01915
Sat Mar 3, 2012
You will need to get the student loan company to provide an estimate of what the payments will be. If they will not provide that you will be stuck with the 5% calculation.
0 votes
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