More than 65% of the First Time Home Buyers we talk to have some amount of Student Loan Debt. Because there are so many different ways to pay for college now, many of those we talk to have not even started paying for all of the debt they accrued while in college. If you are looking for a mortgage approval with deferred student loans, figuring out what your deferred student payments are going to be, is critical in getting approved to buy a house right now.
An August 2012 study, “Denied? The Impact of Student Debt on the Ability to Buy a House,” found student loans could be a stumbling block for recent graduates who are single or married to a spouse who also has student loans. A separate study by credit bureau Trans Union found the average student debt per borrower jumped 30 percent from $18,379 in 2007 to $23,829 in 2012.
Our experience, however, is that so many people have Student Loans, that it’s really not a “red flag” to underwriters, it’s just another obligation that we have to present in the debt to income ratios. In some cases, we do NOT have to count Deferred Student Loans – in other situations we do.
3 Tips For Mortgage Approval With Deferred Student Loans
Here are some tips for getting a Mortgage Approval if you have Student Loans – these tips apply to ALL home buyers who have student loan debt, not just first time home buyers:
- Be diligent about making your Student Loan Payments on time – especially if you are going to apply for a Government Backed Mortgage loan program like a USDA home loan, FHA Mortgage loan or a Veteran’s home loan (VA Loan). If you have a student loan that’s currently in default, you are not getting another government backed loan right now (see* below).
A history of delinquency on a student loans will not only damage your credit scores, it could also stop you from qualifying for a home loan. This is particularly true if you have a government-backed student loan and apply for a loan from the FHA Home Loan, a Veteran’s Home Loan, or a USDA Home Loan in NC.
We are required to check the federal Credit Alert Verification Reporting System database (CAIVRS) to make sure you are not currently in default on any government loans or obligations (including the IRS), and we are required to include that information in your mortgage application file.
Unfortunately, this report is not normally pulled until after the loan application is fully in process, and all of the documents are gathered by the loan officer. Because “older” student loan delinquencies do not always show up on credit reports, this can be a BIG “Ugh-Oh” after a contract is written.
* If you are currently delinquent on Student Debt – and you contact the folks you owe, set up a repayment plan, and STICK TO THAT PLAN for at least 6 payments, we have been able to get approvals for a FHA and VA mortgage loans.
- Have ALL of the documentation you can find about each of your student loans available for us when we go over your initial loan application. Why? Because you will note below that we are required to count deferred loans from the time of CLOSING. This means that if you apply for a mortgage in April, and we are not closing until the end of July – we need to know what’s going to be deferred as of JULY. We have worked through this many, many times – having contact information and details about each loan will make this process much, much easier for ALL of us.
Bank rules for Mortgage Approval With Deferred Student Loans
FHA Loans: If 12 month deferment or more on Student Loans, we don’t have to count the debt. If there’s LESS than 12 months AT THE TIME OF CLOSING, use 2% of deferred student loan balance* After September 14, 2015 – this is changing. We will be counting ALL Student Loan payments to qualify you, even if the current payment is deferred or set to zero. We must establish a payment, or count 2% of the balance.
USDA: 1% of the deferred student loan balance*, regardless of deferment status.
Conventional: Use 5% of the deferred student loan balance*, regardless of deferment status.
*For ALL loan types, if we can provide supporting documentation from the creditor to show future estimated monthly payments, we can use that figure instead of the guideline. This is an ESPECIALLY important rule to consider when applying for a USDA Home Loan, because they can NOT use an IBR loan to qualify you for a mortgage – meaning if you have an IBR Student Loan Payment, you really MUST convert that to a fixed rate payment. Even if THAT is deferred, we will be counting the payment against you.
- Don’t shop for more student loans while you’re attempting to get a mortgage. We are required to pull your credit report within 72 hours prior to closing and if that report shows new inquiries, you’ll have to sign an explanatory statement. If those new loans are imminent, they might be added to your debt ratios and that could derail your mortgage
Calculating Debt Ratios With Deferred Student Loans
Debt to Income Ratios might be THE MOST critical thing that Mortgage Underwriters look for these days – no matter WHAT mortgage loan program you are applying for. Why is that? Perhaps it’s because of the new regulations that went into place earlier this year, known as the Qualified Mortgage Rules. Although, in NC, we’ve had many of those rules in place for many years, the “wiggle room” by the Automated Underwriting Engines for DTI is tighter now than it ever has been.
The fact that you have student loans or the amount of your deferred student loan debt isn’t as important as your total monthly debt payments. We are looking at the total monthly debt relative to your gross monthly income. This is the calculation known as a debt-to-income ratio, or DTI. Sometimes, those of us who have been in the business forever call it the “Back-End” ratio.
Most mortgage programs require us to calculate a “front-end” ratio, which compares your total monthly housing expense — including your mortgage payment, property tax and homeowner insurance premium, homeowner association dues — to your monthly gross income. In general, the Underwriting engines want to see this ratio no higher than 31%. If you have VERY FEW other debts, we’ve definitely seen this number be higher.
Then we are required to look at the back-end DTI, which includes your housing expenses (front end number) and includes your student loan debt, credit card payments, car loans and other debts with your gross monthly income. Although there are ratio waiver opportunities, for USDA Home Loans, we are currently held to a pretty “hard” ratio of 45.000000% for loan approval. With FHA Home Loans, we can normally go quite a bit higher.
We’ve also put together a guide for Recent College Graduates Looking for Their First Home.
If you are applying for a USDA Home Loan, and you currently have IBR payments, you might consider taking them out of IBR status – so that we can calculate a monthly payment.
With IBR student debt – USDA Home Loan underwriters no longer allow us to simply count $100 per loan, now we must calculate a payment based on 1% of the balance.
For FHA Loans, this is even higher. Beginning 9/14/15 we are required to count 2% of the balance on Deferred Student Loans that have a monthly payment of $00.00.
Child Care Expenses, Energy Expenses and Cell phone bills (for instance) do not get included in DTI ratios for a USDA loan or a FHA Mortgage Loan. VA Loans do look at Child Care and Energy expenses in the ratios.
If your DTI is too high, you’ll need to increase your income or reduce your debt.
FHA Loans and Conventional Loans allow us to include the income from Non-Occupying Co-borrowers. You are allowed to pay off credit card debt to qualify for a mortgage, however, you’ll need to do that before you apply for your mortgage. Paying down debt to qualify for a mortgage is simply not allowed – although getting a gift to pay down that debt IS allowed… the Underwriters generally require you to close the credit cards you pay down, if you do this after you “formally” apply for a mortgage. (READ: This is another reason to call us for a “pre-qualification” session PRIOR to writing a contract to buy a house).
Have a Student Loan or a Car that only has a few payments left? It use to be that if we had an installment debt that had less than 10 payments left – we didn’t have to count that payment in the Debt ratios. Now, it is completely up to the Underwriter. We’ve seen loans with only 5 payments denied by USDA because the underwriter felt that the borrower did not have a long enough history of making payments (carrying debt) that high. This is where payment shock is also considered by the Underwriter – and those who have lived at home, making no payments for a housing expense (and didn’t save a ton of money) have a disadvantage.
Mortgage approval with deferred student loans in 2015 can be like working a really really hard Sudoku puzzle – it takes someone who REALLY knows First Time Home Buyer programs to help you get the numbers to work. That’s where we come in – we deal with SOOO many folks who have various types of deferred student loans, we know what WILL work, and what won’t. Call Steve and Eleanor Thorne 919 649 5058 and get Pre-Qualified today!
Hi Eleanor, thanks for all the information on this great blog. I just have a few questions to verify on “FHA and VA Loans” I am trying to qualify for a FHA loan in next year after I get all my 2014 taxes filed. I currently have multiple student loans that they are all in a 12 months deferred status and my monthly payment due each month is $0 even when I downloaded the verification letter from my lender it says $0. Let’s say if I try to apply for a mortgage in March, and I will have 2 or 3 months before I need to reapply for student loan repayment, do I still count that I have $0 monthly payment on my student loans or I will be subject to the 5% on loan balance? When you says 5%, it means 5% of my student loans balance divided by 12 months or 5% on each month?
Niki – I sincerely hope you will give us a call – because this can be tricky to navigate (919 649 5058, it’s perfectly OK to call us on weekends and after hours). We have seen situations where folks “pre-paid” their student loan, and this extended the deferment date, which for FHA might be the best option. I don’t know that ALL lenders allow you to do that, but I know for certain that several of them are allowing this option. For those that won’t, we’ll need to help you navigate when you close, based upon when they will renew.
Regarding the 5% – this is 5% of the balance. Now, I’m getting ready to write about a new Conventional Loan program that only requires 3% down payment, and they only require 1% of the balance as a calculated payment. So again, there are many options, call us, and let us go over the particulars of your unique situation 🙂
BTWs, CONGRATULATIONS!!! You’re going to buy a house in 2015! That’s so exciting!!!!!!
Hi Eleanor, thank you for replying to my message. I wasn’t sure if you will check for comment. Another question I have is kind of out of the topic is that, I also owe IRS income tax and I am under a deferment and is set to each month I make a payment of $250. Will this $250 also count against the debt to income ratio?
NIKI, great news about the IRS – yes it will show in your debts, but as long as you’ve made 6 months of payments on time, we won’t have to have the whole debt paid in full – which is what we normally need with an IRS debt 🙂
So after the whole process going through VA to get a mortgage, 3 weeks away from closing, they say they need my student loans to be completely deferred for 12 months to get approved, even if my payments due are $0/ month and forbearance is not acceptable they say. My monthly income is boderline to be eligible for economic hardship deferral for student loans. I’ve just applied for deferment hoping they approve and on time for closing. So basically I may make too much to defer student loans, but not enough to get mortgage if they are included with my monthly debt. We had our heart set on this house and had us thinking everything was going smooth. Is this normal to have student loans come up as an issue so close to closing? How come voluntary forbearance won’t work? I’m running out of options so late in the game. We’ve already been through alot and it’s our first home.
Anthony – different lenders have different standards. You should call us, so that we can help! 919 649 5058
So after June 2015 will FHA require student loans to be counted? Is there any link I can go to read more about this upcoming change?
Yes – we wrote about the change to FHA Deferred Student Loan requirements that will change NOW on September 14, 2015 – this has been updated from the June 15, 2015 date that was initially put out there by FHA… In the mortgage business, expect change 🙂
What about using child support as additional income. I was told I could use it but then they said I couldn’t. My child is 17 years old, however the arrearages are 23,000. Child support told me that it is law that even though the child is turning 18, the support will continue until that balance is 0, which means continual income. It is taken out if his check before the other patent even gets paid. Please advise?
Also I really need help with this process from someone knowledgeable. I left you a voicemail
Do you guys do mortgages in TN
Tia – please call us. Normally we see this issue when one of two things happens… a loan officer doesn’t ask all of the questions they should AND/OR the documentation shows that the income has not been stable in the past 12 months. We would love to help! Here’s some information on Single Parents.
https://ncfhaexpert.com/fha/single-parent-qualifying-for-a-house-in-nc/
Our number is 919 649 5058
Kim, we do loans in Tennessee – how can we help??
-E.
Great info! I have student Linda in deferment, finishing second masters this sumer. My lender set up a call with navient and they gave them loan amounts as if I were to do flat 10 plan ($1,000/month), but I will qualify for ‘pay as you earn and end up paying ~$200-250/month. Is there a way to get them to use this amount to calculate dti?
Is Navient the Servicer of your Student Loans? I didn’t think they did that, but I don’t do Student Loans.
If you are working on your 2nd Masters, my guess is that you might have a couple of different Servicers… YOU should contact each one, get a PAYE 1 or 2 or IBR actual payment amount. Once you have that in writing, we can use that amount to qualify you. If you can’t get an actual payment in writing, or if the payment amount is $00.00 – starting in September, we have to use a portion of the balance. Here’s more information.
We will be glad to give you a no obligation, free estimate of what we can do to help you get a mortgage Call us at 919 649 5058
Yes, they are. All 16 of my different loans show up when i log in to their website. The sallie mai students loans turned into Navient about a year or 2 ago.
i think USDA requires the loan amount to be a fixed amount, does conventional loan require this, or can you use the IBR payment amount to calculate dti for a conventional
Thanks again!
Micah – you are right. USDA requires them to be fixed payments. HOWEVER, if you buy this summer, you don’t have to count Deferred Student Loans (if they are deferred for 12 months). Starting this Fall we WILL count IBR for FHA Loans –>> https://ncfhaexpert.com/front-page/deferred-student-loans-fha-mortgage-in-nc/
You said if you buy this summer you don’t have to count 12 month differed loans, is that for USDA or FHA?
Thank you again!
If you buy with a FHA Loan, and you have Student Loans with at least 12 months deferment, we don’t count them against you. You must buy before 9/14/15. If you are in NC, we offer the NCHFA Grant, which pays for all but .5% of the down payment on a home. This is what most of our clients are doing you can call us at 919 649 5058
USDA Home Loan Program changed their guidelines to require us to count deferred Student Loans as of 12/14
I’m am near closing as well and my student loans have come up. There deferred until 3/2016 due to me finishing my bachelors degree. I’m however already enrolled to start masters but they won’t change my deferment dates until after I’ve been in classes three weeks. I’m in Michigan trying to obtain a VA loan any possibility you can help me?
What is the difference between forbearance and deferred? A lender won’t approve me because I put my $0 monthly IBR plan in forbearance to show no payments for 12 months and now the lender says this isn’t going to work. They need it deferred not forbearance. What is the difference?
Tim – in “mortgage language” Forebearance means that you can’t make your payments on time. This is viewed very negatively – and is different from “Qualifying” for a deferment.
A Deferred student loan payment means you “qualify” (normally) because you are earning at a level that doesn’t require payments – or perhaps in a situation where you’ve only been out of school for a short period of time.
Yes, we can help you. Call us at 919 649 5058. VA Loans do not have the same deadlines coming up that FHA Loans do. Many banks have “overlays” meaning they have their own “rules” for making a VA Loan. You can call us 919 649 5058
I called but not sure my voicemail was received. If someone could call me at 313-384-2293 i would really appreciate it.
Tamika, You are in a tricky situation. VA Loans, like FHA Loans are generally underwritten so that you need 12 months in deferment from the point of closing (which usually means 13 months).
With SOME Student Loan companies, we’ve seen folks be able to reset them, which can get the payments extended out. We’ve also seen folks make a couple of payments in advance – so “pre-pay” $200 (for instance) and get the deferment stretched out.
Sorry – we were meeting with some folks last night, but you are first on our list this morning!
Hi, right now I have several late payments and installment loans. If able to make six months of consecutive payments what are my chances of getting approved for a fha loan?
Aaron – I’m thinking you mean you are late on Student Loans? If so, yes, you MUST be caught up and make payments on time for at least 6 months. Since I can’t see your credit – I’m speaking in VERY GENERAL terms. Once you have your Student Loans (and everything else) caught up, you should look at what it would do to your scores to add revolving credit. If you want to fill out the application on the top right page, we can put together an exact plan for you – at no cost or obligation.
Thank you for replying, I will definetely fill it out and I would love for you to give me an action plan so that I can get approved! I’m in a great situation now where I’m able to stay with my in laws and save money so that I can pay off debts. Do you offer mortgage loans in Texas?
The best resource we have for you in Texas is our good friend, Tom Burris. He covers the State, and is very familiar with Government Mortgage Loans, and the Deferred Student Loan changes. You can reach Tom at 214 763 4629.
My problem is my GI Bill seeing how it is not counted as income have about one year left before graduate. My student loans are deferred until next fall but my part time work is only one year. Have VA, FHA, and USDA possibility but debt to income ratio is off because GI Bill is not included in income have VA disability besides part time for about a year now. Looking for a fixer up house so hard to get them to qualify for loans. Had a easier time financing a $35,000 truck then a $28,000 home on one acre of land.
The other problem you are running into (maybe) is that most $28,000 homes, on one acre of land are manufactured homes. Manufactured homes are titled differently in every state, because they can be moved down the road. ALL states title a home that was “stick built” on site and fixed to a piece of land the same way. Because of the difference in title (in NC we title Manufactured homes with a Car Title) the rules vary WIDELY from state to state. If I’m correct, and you are looking for a manufactured home – I strongly suggest that you go to a Wells Fargo office. They might be able to help. Good Luck
Hi. I have a question for you Eleanor. I have a student loan that has been in deferment for years now(I went to school in 2005 and didn’t finish). So what do I have to do? My husband co-signed on it as well. We have a large family, with 6 kids and really wanna buy our own home! What can we do?
Tiffany! If you can document that it’s in deferment, and you can find a house before mid-September, then you are Golden. I would find out what the payment would be if it was out of deferment.
I’m in Denver, CO Metro area and can’t believe the confusion out here on the new rules in place by (June 15 and September 14, 2015). I’ve heard that Fannie Mae dropped the 2% requirement reducing it to 1% but this rule was fashioned by Fannie Mae & Freddie Mac as a prerequisite in order to sell mortgage loans to them down the road. The VA web site says nothing of this as a VA requirement but speak of it only as credit overlays.
Do you have any contacts out here who know what they are doing? My loans are auto deferred for at least 3 more years as I finish Graduate school.
Tom – you can probably get good information from Cherry Creek Mortgage. They are based out of Denver, and they have a good team. Larry Bettag is a regional manager for them and a personal friend.
I am in need of help. I keep getting mixed information from lenders. I read and stay up to date with this blog, which is great and very informative. But the lenders that I have spoken to do not seem to be this knowledgeable. I need help. I am ready to buy a home. I saw where you said there is also a new conventional program that requires 3%? What I have been experiencing is that if your situation is not cut and dry like a score of 650 and above, no student loans, then they are not wanting to work with you as much. All my loans are deferred, and I feel like I still can’t get anyone to take the time to work with me. My score is a 635, which I know is not great. Are there any programs that I could qualify for and anyone that will help me?
Tee! Oh Goodness! Yes you can buy a house! Are you in NC? Call us this weekend at 919 649 5058, and we will go over your options with you. There is a Conventional Loan that only requires 3% down, but it is kind of like USDA in that they are looking pretty hard at Student Debt. Your best bet – today – is a FHA Loan. Every state has a Down Payment Assistance Program available that will cover 3% of the 3.5% required for the down payment. You can do this!
Thank you so much. I will call you. Yes I am in North Carolina and I do need assistance with the down payment. Thank you so much.
Hello,
I was recently denied for an FHA loan because of my student loans. I was told that they will need to be in deferment for 12 months in order for them not to be included in my debt-to-income ratio. The only way that I will be able to do this is by attending graduate school. Would that be a good idea?
I also heard that you have to be working at the same job for two years in order to qualify for a loan. Is that true or do you have to have a work history of more than two years? I have been at my job for 7 years, however they are making serious cuts and I have heard that there’s a good chance that they will not keep my department.
My mother, my cousin and I (along with my 2 children) are currently living together in a 3 bedroom house (rental) to save money for a down deposit on the purchase of a house together. It is getting very frustrating for everyone and I don’t know where to start in order to become eligible for an FHA loan. Instead of all of us saving for a down deposit, should I use that money to pay down my student loans first (at least for a year)?
With the rules changing I am super confused on What would be the best way for me to approach applying for an FHA loan and if the new rules will work for me or against me. Currently I have $85,000 in student loan debt and I make around $35,000 annually, my credit score is around 679, and I have around 3 credit cards with low balances (min. $100 on each), and a personal loan ($10,000) that I am currently repaying back ($210 a month / $8,000 balance).
My mother and cousin only work part time and their credit scores are very low, so they won’t be able to help much with co-signing. We thought about working on building their credit scores instead.
Thank you for taking the time to read this. I really appreciate any advice as I am getting very discouraged from this process but we really want to purchase a house because the money we are putting towards the rental can go towards something we can call our own.
Barbara – I’m sorry you are getting frustrated. Here’s the situation… we are required by an actual law in NC to verify that at the time of closing, you have enough income to cover your mortgage payments, and that you meet the program guidelines. That’s one of the reasons why FHA Loans require us to verify that your loans are in deferment for the next 12 months (until 9-14-15).
In a few weeks, we will be required to count ALL student loans – these are the new FHA Guidelines.
My BEST suggestion for you, is to establish a small payment on your student loans, some of them are as little as $20 a month – take the money you’ve been saving to pay down the personal loan, and renegotiate it to a lower payment. If you have established student loan payments, you can buy a house with a USDA Home Loan, and not need any money for your down payment.
I do NOT know enough about your personal situation to know if this is the BEST option, and because I don’t want to prescribe a course that is NOT going to work – I strongly suggest that you talk to your lender and see if they agree that this might be a good course for you.
Does the six month rule only apply to federal loans? I have a late payment showing on my credit for my personal student loan. Besides lowering my credit score, how will that effect my mortgage options?
Mary, I don’t see many “personal” Student Loans. However, the rules for credit on most programs say that you can’t have more than a 30 day late on an installment loan during the past 12 months. Great question, if you want to call me, we’ll be more than glad to go through your exact situation and let you know 🙂 919 649 5058
Our lender told us that the FHA people told them that they must use 2% unless we come out of deferement. An estimated future payment letter is not enough and we must be in repayment to use a number other than 2%. Is this true? Our lender right now is quicken loans and we are pretty unhappy because had they informed us of this FHA rule we would have signed the contract on Friday and not Monday. Given our current student loan burden they told us that FHA is the ONLY option for us as conventional counts 5% of loan as monthly payment no matter the actual payment. I don’t trust their knowledge. We are in NY but I assume FHA rules are not state specific. What do you think about this ?
We need some sort of payment on the credit report. It can’t be a Zero. FHA Rules are NOT state specific. USDA Home Loans are counting 1% of the balance. Can you get a non-occupying co-borrower to help you with qualifying???
No, there is really no one with financial means that we can ask to to this. We came out of deferement anyway and this should generate a bill for us, so hopefully a bill is sufficient? I mean it will not be reported on the credit report for some time. We will generate a bill, pay it, then go back on deferement after closing if this works.
Yes – it will be sufficient. Your lender needs to do a Credit Supplement. When they do that, it will show up on your report. In essence, they are “forcing” the information to show on the report, as opposed to having it show up automatically. This can be done in as little as 72 hours. It should work. CONGRATULATIONS!!!!
We have to wait for IBR to process and it takes 30 days or more, we are afraid seller could cancel contract if they don’t want to wait. It says we agree to obtain financing by X date but that day is right when our Irb should be complete. We never bought anything and this is FSBO. I don’t know if sellers usually wait
You should be OK. In NC the contracts automatically extend 15 days
Eleanor,
I live in Tennesse, have a credit score of 640 and tried to get approved for a FHA loan. My lender said that I needed a letter that specifically says my payment is $0 for 12 months. I was on an IBR plan that was $0, but it expires Feb. 2016. and I am now enrolled in school. My loans are currently in school deferment. My lender says school deferment won’t work because I’m not making payments. I tried to get Navient to put me on a payment plan but they said they couldn’t because I was in school. Navient was able to send me a letter saying that I was on a IBR $0/mo plan that expires 0/0/00. Seriously, it said 0/0/00. My lender says they have to count 2% of my total loans because there is no end date for my IBR and I’m not making payments. Is my lender giving me accurate information? What are my options?
Yes – your lender is giving you accurate information. Freddie Mac has a 3% down payment mortgage that would only count 1% of your Student Debt, and USDA has no down payment requirements and count 1% of your student debt.
I was told that i cannot get a home loan due to Student loans that i have which they are in default right now..Which made my day upset so what do i need to do to get approved for a Mortgage…my score is 621.
You have a couple of choices. You can take the loans out of deferment, or you can add a non-owner occupying co-borrower. Freddie Mac is only considering 1% of the balance.
Hello, I am a 100% disabled vet and my spouse is my caretaker unfortunately she has School loans which are currently in forbearance due to her having to help me. I want to buy a home using my VA or CALVET but I am unsure of how to tackle the forbearance issue. Any advice would be greatly appreciated.
Mark! GREAT NEWS! VA Loans are different. As long as they are in Forbearance or deferred for at least 12 months from closing we do not have to count them! Thank you for your Service. Please call us, 919 649 5058, we would be very happy to help.
So we are being denied two weeks before closing because our IBR payment will be too high 12 months after when we have to re apply for IBR? This makes no sense. Do you know any mortgage person in NY we should contact . IBR can never be certified more than 12 months.
Anna – contact Rob Rauf at Home at Home Bridge Financial. He’s in a Mastermind group with me. I don’t know if he will be able to hel, but its certainly worth the call. GOOD LUCK!
Hello. I graduated in May 2015. I have student loans since 2008. Debt around $30K. It took a while to finish bachelors degree. I’ve been working since I was 17yrs old. I’m a first year teacher in Louisiana, I make around 45K/yr. I just started making fixed monthly payments on student loan. My first payment was due this month. My car is paid off but I do have small amount of credit card bills. My credit score is around 670. Do you think I would be possible for me to get a usda loan? Thanks in advance for you input!
You should contact my good friend Tom Burris. He recently moved to Louisiana from Texas, and he’s a great loan officer. His number is 214-763-4629 / Good Luck!
Hi I have the usual scenerio. My IRB is 0.00 and the lender I have been talking with doesnt seem to have much knowledge nor seems to want to help. Do you know of anyone with experience in this around Erie Pa?
Hi Eleanor – Your blog is fantastic and has been so helpful (thank you)! Currently, I live in NYC and will be moving to FL. Fortunately, I’ll be keeping my same job of 6 years and working remotely.
That being said, I am interested in buying my first property and considering the FHA program. My concern is this may not be possible because of my DTI because of my outstanding student loans of 90K (all are in good standing). I’m currently, taking graduate level courses online and my loans are in deferment while in school. Do you know anyone on FL that would be able to assist me?
WE HAVE CLOSED. We had to take our loans into repayment, it slowed us down and there was so many hurdles but it is now done. THANK YOU. You really put my mind at ease and i greatly appreciate this blog
Hello Eleanor,
Thanks so much for the information provided. Do you have any contacts in NY, NJ or CT? I was planning on buying over the summer but that didn’t happen and now I am trying to deal with the change in the FHA guidelines and my student loans. I am not exactly sure how to even take the loans out of deferment or if that is the best option for me.
Thanks for your help!
You can call our friend Rob Rauf
Yes, we have a couple of offices in Pennsylvania. You can call any of the Equity resources Loan Officers, and they can help you. Tell them Eleanor in NC suggested that you call 🙂
Hi Eleanor,
I reside in the state of NC… only minutes away from wake county. I recently had a pre-qualification for a home for a USDA loan. I was told my debt to income ratio is too high. I have multiple student loans (currently in deferment). My credit score is 612. I was also told to continue good payment history, get a fixed payment for student loans, pay off or pay down my car only 7k left (or pay up to 10 months left on the loan), give it six months and try again. He mentioned I have a few new credit accounts that need “seasoning”. My question is should I consolidate my student loans? At what point should I start repayment of student loans? Should I wait a month before the 6 month period before re-applying for a home loan? I am having difficulty coming up with the best strategy to ensure I am qualified when I e apply in July 2016. Please help!
Brittney – you can always call us. There are other programs you might want to look into that don’t require a down payment. Our number is 919 649 5058
Hi Eleanor,
My husband and I are in the process of buying a home in Virginia using a VA loan. We were pre approved but now the lender is saying they need to see our loans deferred for 12 months from the date of our first mortgage payment. Is that normal? We have provided all of the necessary documentation to state that our payments will be 0 for the next 12 months but we can’t get anything that will attest to that for the next 14 months as the deferments are reviewed on a yearly basis. Is this normal?
Ashley unfortunately, every lender is different when it comes to a VA Loan and Student Loan Debt.
I recently appproved fo chfa loan for my house and finished with my closing. Can I change my student loan back to deferment.?
Hi Eleanor,
I am reading through some of the previous questions, I have a similar situation. I am currently in school got the pre approval for the home. I am finally in underwriting status and have given them everything that they have requested. I owe about $100,000 in student loans according to Credco a company that I had to call and have to contact Navient My student loan carrier, My income including child support is about $4,000 a month without the occasional overtime. I am unable to count my part time job as income because I have not worked it for 2 years. Navient has written a payment plan but it states that it will not start until July 2017. It is my understanding that I cannot come out of deferment because I am in school. My lender is not willing to write the loan is this now the standard? Meaning I will not be able to move forward on my loan not only with them but any other company that I reach out to?
Hi Micah
I am currently in the same situation and may lose the earnest money I put down on a home I’m trying to purchase in GA. 2 days prior to thinking I would close, underwriting says they can’t use the 5 docs that I provided from Navient showing the IBM monthly payment of 217.00. They say they have to use 1%of total loans and now DTI is too high! Underwriting says they need a fully amortized payment and Navient says that’s not possible because I have to requalify each year. What was the outcome for you?
Hi Anna
I am in a current situation in GA.I found out days before closing that they can’t use the invoices for monthly payment because FHA requires a fully amortized payment. NAVIENT can’t provide that because the IBR is only for 12 months at a time. I may lose this home and my earnest money if I can’t get this cleared…soon! What happened with your situation?
Will a credit supplement work for my situation? I am on IBR payment plan. PaymenTs are $217 per month. I got my first bill in June and paid it so I have an invoice, receipt and I set up auto debit for remainder. However, days before close, underwriting says they have to use 1% and this will put me over for debt to income. Underwriting wants amortized payment but that is not possible with IBR plan since I have to qualify every year. Based on current FHA guidelines, I think they will have to use the $217 invoice if I can get the credit report to show the same monthly amount. Navient reported the $217 on June 30th but I don’t know if the seller will wait another few weeks for the updated report. Should I ask my lender to do a credit supplement and, if so, does that mean that they can use $217 instead of 1%? Our new close date is July 6th but we may get the seller to agree to a week extension. The original close date was June 30th. Please help
That’s the way I understand it. You could buy a truck after you bought a house, so I don’t see a difference.
Yes! Do a credit supplement. In NC you have 14 days past the contract closing date for the Contract to be valid
Thank you! I don’t know what the grace period is for GA but I will speak with my lender about the supplement report and the realtor about the grace period or possibly requesting an extension.
I requested a credit supplement report and my realtor agrees but lender has refused and has given me revised disclosures using 1% of total loan balance BUT still only approving the loan if I pay off $6,000 of debt AND close the accounts! I feel as though I am being railroaded. Why is my lender refusing to process in accordance with FHA guidelines and use the monthly invoice with the monthly amount in the credit report?! If I pay $6,000 off in debt just to get around the 1% then I won’t have money to cover the remaining closing cost or to make the move. Why would my lender try to force me, not to just pay off but to close existing credit accounts which will have a negative impact on my score?!
Please let me know how I can escalate this, other than seeking an attorney and filing a lawsuit?! I don’t know what else to do. I’d there anyway I can get FHA to step in and investigate, quickly, so I don’t lose this house or my earnest money?
A lender has the ability to either underwrite a loan exactly to the FHA guidelines, or create “overlays.” FHA doesn’t actually make loans, they only insure hem – so I’m not sure what they could do? You probably want to go above the Loan Officers head. I’m sorry I don’t have better news for you.
Can you please post how your situation turned out. I am currently in the same situation and would like to know if you were able to close.
Hi,
We have applied for the VA loan and got pre approved and in May of this year we got our student loans deferred till may of next year. But they need our student loans deferred from Oct 2016 till October 2017 as Oct 1 would be our first house payment. Is this anyway go about this and not lose the house we love and the money we have already invested?
Kayla you will need to contact your Student Loan Servicing Company. They may allow you to make payments for a month and then go back into deferment status?
Hi,
My name is Gwen and I live in Illinois. I tried to call the number posted but it went to the voicemail for someone named James. Please post a different number or let me know if he works with you as well. My issue is similar to another Navient client but too long to type everything. Basically, I’ve talked to about 7 Reps there, including a supervisor. One Rep advised me to come out of my in-school deferment, so I did in order to get them to post my IBR. They kept changing the process for submitting info to the credit bureau’s which delayed things. The loan officer finally accepted the letter showing what my IBR payments will be, now it’s taken 2 weeks for the credit vendor to submit paperwork to post my payments, and I’m still waiting. I’m just at the pre-approval process and I’m really aggravated and unsure what to do. Meanwhile I’m not in an in-school deferment so payment was due last month but my loans were approved for me back in July, to take classes. I need God to rescue me and soon.
Gwen, if you have student loan debt – the payments must be posting for you to qualify for anything other than a VA Loan. USDA and FHA Loans now require that you have level payments. Freddie Mac, a Conventional Loan, will allow you to have an IBR payment, however they require a 5% down payment. I’m sorry for your struggles, we do not lend in Illinois. Trying to buy a home with student loan debt is very complicated at this time.
” *For ALL loan types, if we can provide supporting documentation from the creditor to show future estimated monthly payments, we can use that figure instead of the guideline. This is an ESPECIALLY important rule to consider when applying for a USDA Home Loan, because they can NOT use an IBR loan to qualify you for a mortgage – meaning if you have an IBR Student Loan Payment, you really MUST convert that to a fixed rate payment. Even if THAT is deferred, we will be counting the payment against you.”
IS this still true after the 9/14/2015 changes? Thanks
Annie, this is how USDA is currently looking at IBR payments
This position is going to spell disaster for the US housing market, especially as college tuition continues to rise. Fewer and fewer young adults will be able to buy homes — not until 20 years after they graduate. Not so good for the economy, I’m afraid.
I am trying to decide my best options in Mississippi. Credit score is 620, owe 90,000 in student loans, working on a second master’s so loans have an in school deferment status with 0 payment, working and earn 60,000. Want to buy, but which route is the best with my student loan debt?
Tammi, you will need to find a Freddie Mac lender… and you will need to have SOME payment arrangement for each loan, even if it’s only $10 a month. You will need to be prepared to make at least a 3% down payment on the home. Those funds can come from a gift.
Ok, do you know of anyone in my area?
Also, can I find my own home or are they only Freddie Mac homes that are for sale?
Tammie, these are for all homes. Freddie Mac is just an issuer of Loans. Through the foreclosure process in the past few years, they do also have homes for sale, but this program is for all homes for sale in your area. What area are you in???
How can I find a Freddie Mac lender in Oklahoma? I spent months with a local lender applying and waiting for a response then told everything looks good BUT we need to go by what the pmt would be on a level repayment plan which, at $1250, totally put me over the debt income ratio to qualify. My IBR pmt is currently $41. I was given the option to find a co-signer no mention of Freddie Mac. Maybe there’s still hope but I haven’t been successful looking up lenders for Freddie Mac. Please let me know if you can help.
Gina, here’s a list of Lenders in Oklahoma that are signed up with Freddie Mac. I apologize I don’t know someone there. Best of luck! http://myhome.freddiemac.com/refinance/new-lender.html
I live in Mississippi. I really appreciate this blog. Have read all of the comments and gained some valuable information. Also, how do I negotiate a payment as low as $10 with my student loan servicer?
MY HUSBAND AND I LOAN WENT TO UNDERWRITING AND MY STUDENT LOANS CAME UP. I OWE $150,000 IN STUDENT LOAN, HAS NEVER DEFAULTED AND LAST YEAR THEY PUT ME ON AN IBR REPAYMENT PLAN UNTIL SEPTEMBER 28TH, THEN I HAVE TO RECERTIFY. I DON’T EXPECT MY INCOME TO CHANGED DRASTICALLY SO I WON’T HAVE TO PAY THE LOAN BACK ANYTIME SOON. WE GET A CALL ON MONDAY FROM THE LOAN OFFICER STATING THAT WE CAN’T GET APPROVED FOR THE LOAN BECAUSE THE 1% OF MY LOAN BALANCE WILL PUT ME OWING ABOUT $1,500 A MONTH. WE WERE DUE TO CLOSE ON OUT BEAUTIFUL NEW HOME MARCH 23RD. WE ARE SO HURT AND DISAPPOINTED!
WE LIVE IN SANFORD FLORIDA 32771
Janice, your only option is a Freddie Mac Loan. You will need to make a down payment.
Do you know anyone who can help with Freddie Mac loans in Mississippi?
Tammy, I would contact this person:
Sean Cornwell
Red Rock Mortgage
4343 Lakeland Drive
Flowood, MS 39232
(601) 368-8329
scornwell@redrockmtg
I just left him a message but I haven’t heard back. Best wishes!!!
Thanks so much!!!
Hi there,
Can you refer me to someone who can do Ga loans. I have over 100k in student loans debt. My IBR payment is 0. I don’t know if I should try and come out of IBR or get a consigner.
Latoya, you would want to come out of a $0 IBR status. We can’t work with ZERO. However, once you have a payment, you can use that payment amount on a Freddie Mac loan with 3% down payment. You might want to contact David Mulkey with Homebridge Financial #459864 770-560-7646 I don’t know him, but my good friend Rob Rauf works for them in NJ, and he can do these loans, so I assume David can too. Best wishes!!
Edited:
Hi Eleanor,
I have been making an effort to receive a home loan, but I am in Grad school until March of next year. This has been very difficult for me to access a pre-qualification loan. I was reaching out to you hoping that you can help me. I wasn’t sure if you could because I live in New Orleans. Thank you for reading my post.
My friend, Tom Burris is in Louisiana and is also licensed in Texas. If it can be done, he will certainly let you know. Thanks!
https://loansimple.com/lo/tom-burris/
Live in GA
My husband and I are trying to get approved for a home loan. My husband is currently in default and enrolled in the rehabilitation program where he is making low monthly payments.
However, the loan officer stated he need a letter confirming the arrangements. I attempted to send 2 letters and he is saying it is all about the wording and can not indicate IBR. Can you please advise what specific wording is needed in the letter in order to get approved for this home loan so he can send to UW.
Timica – the Loan Officer simply needs a statement of the terms. So, for instance, you are obligated to pay $63 a month, and your balance is $21,000
Are you still answering questions about home loans?? I noticed the last post was a few years ago! Thanks!
Yes I will be glad to help, and or refer you to someone.