can I be approved for mortgage if default on student loans. 1st time home owner if approved

Asked by Blisz, Eastwick/Southwest Philadelphia, Philadelphia, PA Tue May 18, 2010

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12
deojismom, Home Buyer, Philadelphia, PA
Sun Nov 18, 2012
Hello I just went through this last week. My husband and I were all set to close on our home when we found out after pulling credit again right before that his student loan had gone on his credit report and was in default. If you are in a loan rehab plan and your CAVAIR number is clear than you should be fine. His credit has since gone up 61 points to a 646 after dropping 100 points because of this. We only needed a 620 to get approved for the FHA loan. We have a letter saying that he has made his last 4 payments on time from the dept of education and we are bringing it to the loan meeting tomorrow. They just want to see that the orignal date of default was not in the last year to two years. I added him to my credit card as an authorized user and that's what brought his score up so quickly. To be an authorized user you do not have to get your credit checked.
3 votes
I am in a similar situation with my husband. Hes currently in a active student loan repayment of 9 months. We made it to the 5 month mark. I'm wondering will we be able to do the home buying process before the 9 months. Was your husband still in rehab loan repayment phrase when you purchase your home?
Flag Wed Jan 17, 2018
What if it just recently became default? When we first ran our credit it wasnt but when they ran it again it was shown as default. We are in escrow right now and we are trying to get our first payment in to show its not being neglected..
Flag Sat Jun 17, 2017
Hi wondering what happened as we are in a similar situation. Were you able to get the loan? My boyfriend has a student loan he defaulted on in 2013. He started the loan rehabilitation program this March 2017. We already have a property we want to purchase in mind. He is getting a letter to show he is in repayment. I read after three months, an FHA or VA loan will accept this. Not sure on the USDA though...trying to find out still.
Flag Mon Mar 20, 2017
Jeff and The…, Both Buyer And Seller, New Jersey
Thu May 27, 2010
What matters is your credit score. My husband defaulted on his student loan but that was 10 years ago; now his credit score is in the 700's!
1 vote
my credit mess up due to a student loan Everest collage were to sued have document to show I think creid company working with then may get a kick back on keep it there.
Flag Sun Sep 10, 2017
I have a loan from Everest college the were sued it was close down may 2014, it has mess my credit up
Flag Sun Sep 10, 2017
Terrence Cha…, Home Owner, Allentown, PA
Tue May 18, 2010
It depends on your credit rating, how long ago the default was, and there could be a possibility that the lender will ask you to pay back the student loan before they lend you any money. One main reason why they would have you do this is that if you defaulted on that loan, what will stop you from defaulting on a mortgage loan?

Get with a local lender (local bank or credit union). Their lending policies tend to be a bit more lenient.

Hope that helps,

Terrence Charest
1 vote
Ollie_parham, Home Buyer, Philadelphia, PA
Tue Apr 18, 2017
As a college student can you qualify for credit?
0 votes
Ollie_parham, Home Buyer, Philadelphia, PA
Tue Apr 18, 2017
Can I qualify for a home mortgage if I default on a Student Loans?
0 votes
no
Flag Sun Sep 10, 2017
Robbie Mahal…, , Philadelphia, PA
Wed Mar 27, 2013
We can help you! Just go to our site! >>>>>>>>>>>> http://www.phillystoprenting.com
0 votes
Gita Bantwal, Agent, Jamison, PA
Tue May 25, 2010
You should sit down with a lender . They will explain what needs to be done if you do not qualify right now. You can go to http://www.hud.gov for resources for home buyers and read more about it.
Web Reference:  http://www.gitabantwal.com
0 votes
, ,
Wed May 19, 2010
Blisz, I'd be happy to assit you with your financing needs. The big questions you will need to answer are:
1. What is your credit score? 620 or higher typically needed
2. How much money do you have saved for down payment, closing costs, taxes, insurance?
3. Do you have stable income?
If you defaulted on student loans, how long ago was that? Are the loans now current?
Always feel free to call or email.
Chad 610 457 7262 cbahnsen@mortgagenetwork.com
0 votes
, ,
Tue May 18, 2010
Hello Blisz,

If you have defaulted on your student loans then that is going to negatively affect your credit score. However you score is made up of several different factors. The credit reporting agencies are sellers of information so they will not let you know excatly how they compute their scores. Over time someone who deals witha lot of credit reports can give you certain general information about what affects your credit.
For example, if you defaulted on a student loan 5 years ago ,it would have less impact than if you did it last week. Credit depth is also an important factor. If you have 10 credit cards all with on time payments and a defaulted student loan, your credit will not be affected as badlly as if you only had one student loan and no "good" credit.
I would suggest talking with a good mortgage broker about your situation. I can do credit scores down to 580 whereas most banks start at 620.. Also the broker can discuss your credit report with you and show you how your credit report can be improved whereas those services are not available at your local bank or credit union.

Regards,
Alan Openshaw
Cornerstone Lending Inc
215 674 9059
0 votes
Ed Fallon, M…, , West Chester, PA
Tue May 18, 2010
If you defaulted on a givernment backed student loan, this will probably exclude you from getting an FHA mortgage. I would recommend that you meet with a mortgage lender, determine exactly what you are dealing with, and see what options are available to you.
0 votes
Carol Cei, Agent, Maple Glen, PA
Tue May 18, 2010
Hello, Blisz,

In my experience, defaulting on a student loan is real cause for a mortgage denial. If you know you are in default, why not contact the lender and ask to be put in forebearance. That will allow you to start paying back at a rate that you can currently afford. Once you have established yourself with a good payment history for 6 months - 1 year, you will be eligible for consideration to be approved for a mortgage.

Please remember also, that you need to have some good credit on your file. That means active things that you pay for monthly and pay for on time....for example, your car payment, charge bills, etc. If you don't have that type of credit but you have rental history, car insurance, health insurance, etc., that you pay monthly, you may be able to have alternative credit considered. Yours will be a complicated case but not impossible.

If you need any further assistance, please don't hesitate to contact me directly.




Carol Cei
ReMax Millennium
carolcei@remax.net
215-643-9661
Web Reference:  http://ww.carolcei.com
0 votes
Because once you default on a SL there is no option for forbearance. If that were the case everyone would do that. Once you default you have to either go into repayment or rehab.
Flag Thu Feb 2, 2017
Timothy Garr…, Agent, Philadelphia, PA
Tue May 18, 2010
Hi, Blisz.

The answer really is, it depends. Typically, being late on any credit account (i.e. credit cards, student loans, mortgages, etc.) will create a significant drop in your credit scores from the 3 bureaus (Equifax, Experian, & TransUnion). Your score is a vital part for getting approved for a mortgage, whether you're a first-time buyer or a repeat buyer. But, there are other important factors that come into play (i.e. job history, assets, down payment, etc.).

Most of my professional background was in the mortgage industry, so if you have any additional questions please don't hesitate to give me a shout (tgarrity@brownmckinney.com). Best of luck to you in your search!

Regards,
Tim Garrity
0 votes
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