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How Deferred Federal Student Loans May Impact Mortgage Approval Process

January 18, 2013Kirk ChivasNo CommentsGetting A Mortgage

Will Deferred Student Loans Affect My Mortgage Approval?

Student Loan Home BuyingMany people these days find themselves graduating from College with a boatload of student loan debt.  Most assume that deferred student loans will not come into play when it comes to qualifying for a mortgage.  Here is a brief breakdown of what you need to know:

Fannie Mae/Freddie Mac Underwriting Guidelines On Deferred Student Loans:

Conventional financing currently requires deferred student loans to be included in the debt-to-income ratios for mortgage qualifying.

  • If the borrower’s credit report does not indicate the monthly amount that will be payable at the end of the deferment period, the Lender must obtain a copy of the borrower’s payment letter to determine the monthly payment to be used in qualifying.
  • The Lender may calculate a monthly payment based on 2% of the balance of the student loan in lieu of obtaining documentation of the monthly payment when the credit report does not contain one.

FHA Loan Underwriting Guidelines On Deferred Student Loans:

Unlike Conventional loans, FHA financing will allow the underwriter to not count the student loan payment in the debt-to-income ratios if the borrower can provide evidence that the student loan is deferred for 12 months from the date of closing.

  • You must provide written evidence from the student loan servicer stating how long the loan is deferred
  • The only exception would be for borrowers who are currently enrolled in school and provide evidence of their enrollment and evidence from the loan servicer that the loan will remain in deferment while in school

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