Page 29 - AreaNewsletters "July 2020" issue

H O U S E & H O ME
Buying a House with Student Loan Debt – a Deep Dive
Student loans shouldn’t keep you from the American Dream
S by Tiffany Brown, Broker/Owner, Motto Mortgage
tudent loan obligations delay 71% of non-homeowners lender may use the monthly payment that is on your student
from buying a home, but homeownership and student loan debt aren’t mutually exclusive! You can get approved for a mortgage, purchase a home and still chip away at your student loans. Buying a house with student loan debt just requires a speci c look at your nances.
When applying for a mortgage loan, the lender will calculate your debt-to-income (DTI) ratio, or the percentage of your gross monthly income (before taxes) that goes towards payments for rent, mortgage, credit cards, or other debt. Your student loan payments, not the total loan balance, will be included as part of your monthly debts. Each loan program has a different set of guidelines in regards to what monthly student loan payment, if any, is required to be used in calculating your DTI ratio. BUYING A HOUSE WITH STUDENT LOAN DEBT
According to Fannie Mae, If a monthly student loan payment is provided on your credit report, the lender may use that amount as the monthly payment for qualifying purposes. If your credit report does not re ect the correct monthly payment, the
Painting done the Right Way.
loan documentation (the most recent student loan statement) while calculating your DTI ratio.
If your credit report does not provide a monthly payment for the student loan, or if the credit report shows $0 as the monthly payment, the lender must determine your monthly payment for DTI ratio calculations using one of the options below:
• If your student loan has a graduated payment based on in-
come, the lender may obtain student loan documentation to verify your actual monthly payment for the loan. The lender may calculate your DTI ratio with that graduated payment for your student loan.
• For deferred loans or loans in forbearance, the lender may calculate:
• a payment equal to 1% of your outstanding student loan balance (even if this amount is lower than the actual fully amortizing payment), or
• a fully amortizing payment using the documented loan re-
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It’s all in the Details.
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29 Castle Rock “AreaNewsletters • July 2020