Question Details

Jeanelle8705, Other/Just Looking in Taylor, MI

Does student loan/student loan debt effect the ability to buy home? Mortgage? What are our best choices?

Asked by Jeanelle8705, Taylor, MI Tue Dec 20, 2011

I am a recent grad and my boyfriend and I are looking to move in together closer to my work. We both have student loans, (mine more than his) and we want to know if our chances are slim to none...

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FHA, VA and USDA loans allow for deferred loans to be omitted from qualifying ratios if the loan is deferred for twelve months after the closing date. There are however, certain lenders or sometimes credit score tiers (lower tiers usually) where there may be an overlay stating that deferred loans ARE to be counted.

Conventional loans don't allow for deferred payments to be omitted.

Sometimes it's best if "lending" questions are answered by lenders but as even a lender got the guidelines wrong, I'll suggest that adding, "check with your lender" to CYA if you don't actually regularly check the guidelines would be a good way to save face if you're incorrect. While it's great to share your knowledge, it does Jeanelle8705 and others like her no good if it's wrong information.
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2 votes Thank Flag Link Wed Dec 21, 2011
That is not true USDA requires at least 1% of the balance to used as a payment for deferred student loans! FHA and VA will allow you to omit deferred student loans if they are deferred for at least 12 months from the date of the closing BUT, USDA DOES NOT ALLOW you to omit student loan payments deferred or not!!!
Flag Mon Mar 16, 2015
Thumbs up to Rob for just about the classiest comment I have seen addressing the issue of non-licensed individuals freely dispensing inaccurate financial advice. Ironically, some of answers on trulia by non-licensed people provide a glaring example of how their lack of reliance on a mortgage professional is limiting their business. I.E., telling consumers they won't qualify for financing when, in reality, they can.

Regarding student loans, Rob has explained the guides very well. I would only add that, as a lender, if the loans are not deferred for a sufficient period of time; we would use a factor of 5% (my company, not necessarily all company's) of the totlal outstanding balance. I currently have a client in this situation and the "projected" debt payment would severely limit the purchasing power. A solution (that I have the consumer working on) is to contact the loan servicer to get the actual payment that will be required at the end of the deferrment. All that is needed is a letter from the servicer evidencing the borrowers name, address, account number, etc., and the payments of each loan (if not consolidated). In this case, I expect the debt payment to be reduced to approximately $50 to $100 from the projected amount of $500....big difference in qualification requirements.

Best to contact a licensed professional to get accurate answers for your specific situation. Best to you!
1 vote Thank Flag Link Wed Dec 21, 2011
Yes, student debt does count. Unless you will have them paid off in the next 6 months they will count. However, it doesn't necessarily stop you from getting a loan, it just depends on how much debt vs. income that you have.
1 vote Thank Flag Link Tue Dec 20, 2011
Any type of debt can affect you in regards to obtaining a mortgage or mortgage amount. The best thing to do is sit down with a local lender you are comfortable with and see what (if anything) you would need to do to get ready to buy a home. Good luck!
1 vote Thank Flag Link Tue Dec 20, 2011
I don't agree with Jim Simms' answer. Yes, your loan gets deferred and not counted against you if you are still in school. But that payment will come due once you are done with school and be an added burden on your budget. IMO, just signing up for another class to postpone the inevitable isn't a good idea.
0 votes Thank Flag Link Wed Dec 21, 2011
Student loan payments are counted in your DTI ratio. If you make enough money, you may qualify for a mortgage. Go to a mortgage officer for an underwritten preapproval so you can see what you qualify for.
0 votes Thank Flag Link Wed Dec 21, 2011
Student loans in deferment for at least a year would not be counted on an FHA loan. Take another class.
0 votes Thank Flag Link Tue Dec 20, 2011
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