Understanding which home loan program is the most beneficial for you when purchasing or refinancing a property is key to making a successful loan choice. Our loan officers are up to date on the best programs and newest guidelines, and are here to educate you on your most advantageous options.
If you have current or past student loan payments, the Federal Housing Administration’s (FHA) updated policy could be great news for you! The Federal Housing Administration (FHA) helps buyers with low incomes and low down payments who may not qualify for conventional mortgages. FHA insures the loans, giving lenders the confidence to provide financing to people who otherwise would not qualify.
Effective now, monthly student loan debt may be excluded from your debt-to-Income ratio ( DTI) when the program, creditor or student loan servicer indicates that the full loan balance has been forgiven, cancelled, discharged or otherwise paid in full.
For outstanding student loans, regardless of payment status, to calculate monthly obligation:
o Use the payment amount reported on the credit report or the actual documented payment (when payment is above zero), or
o Use .5 % of the outstanding loan balance, when the monthly payment reported on the credit report is zero.
What does this mean for borrowers with student loans?
This new update allows student loan debt to be calculated at 0.5% of the loan balance if the payment is not reported on the credit report when determining loan eligibility. This may give more purchasing power to some buyers with existing student loan debt.
For more information about these beneficial changes, contact one of our experienced loan officers today!