Student-loan To High? You can still qualify for a Florida mortgage!
Summary for the student loans debt is calculated when qualifying for a Florida mortgage.
- PORTFOLIO – If deferred for more than 12 months do not count the debt in qualifying ratios.
- CONVENTIONAL – income-driven repayment plan lender can use 0 or the amount or credit report amount.
- FHA- Must have a payment of minimum 1% of the balance.
- VA – If the Veteran or other borrower provides written evidence that the student loan debt will be deferred at least 12 months beyond the date of closing, a monthly payment does not need to be considered.
Are your student-loans hurting your chances of qualifying for a Florida mortgage? You’re not alone. The average Florida college graduate is leaving college with $40k in student-loan debt. And, the numbers are increasing year after year.
CONVENTIONAL MORTGAGE RULES FOR STUDENT LOANS
If a monthly student loan payment is provided on the credit report, the Florida mortgage lender may use that amount for qualifying purposes. If the credit report does not reflect the correct monthly payment, the Florida mortgage lender may use the monthly payment that is on the student loan documentation (the most recent student loan statement) to qualify the borrower.
If the 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 the qualifying monthly payment using one of the options below.
- If the borrower is on an income-driven repayment plan, the Florida mortgage lender may obtain student loan documentation to verify the actual monthly payment is $0. The lender may then qualify the borrower with a $0 payment.
- For deferred loans or loans in forbearance, the lender may calculate
- a payment equal to 1% of the 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 repayment terms.
FHA MORTGAGE RULE FOR STUDENT LOANS
How does a Florida mortgage lender determine the monthly payment on a student loan?
The Florida mortgage lender must include all Student Loans in the Borrower’s liabilities, regardless of the payment type or status of payments.
Student Loan refers to liabilities incurred for educational purposes. If the payment used for the monthly obligation is:
- less than 1 percent of the outstanding balance reported on the Borrower’s credit report, and
- less than the monthly payment reported on the Borrower’s credit report;
the Florida mortgage lender must obtain written documentation of the actual monthly payment, the payment status, and evidence of the outstanding balance and terms from the creditor.
Regardless of the payment status, the Florida mortgage lender must use either: the greater of:
- 1 percent of the outstanding balance on the loan; or
- the monthly payment reported on the Borrower’s credit report; or
- the actual documented payment, provided the payment will fully amortize the loan over its term.
VA MORTGAGE RULES FOR STUDENT LOANS
How to Calculate a Student Loan Monthly Payment For VA Loan Qualifying. a. If the Veteran or other borrower provides written evidence that the student loan debt will be deferred at least 12 months beyond the date of closing, a monthly payment does not need to be considered. b. If a student loan is in repayment or scheduled to begin within 12 months from the date of VA loan closing, the Florida mortgage lender must consider the anticipated monthly obligation in the loan analysis and utilize the payment established in paragraph (1) or (2) below. Calculate each loan at a rate of 5 percent of the outstanding balance divided by 12 months (example: $25,000 student loan balance x 5% = $1,250 divided by 12 months = $104.17 per month is the monthly payment for debt ratio purposes). (1) The Florida mortgage lender must use the payment(s) reported on the credit report for each student loan(s) if the reported payment is greater than the threshold payment calculation above. (2) If the payment reported on the credit report is less than the threshold payment calculation above, the loan file must contain a statement from the student loan servicer that reflects the actual loan terms and payment information for each student loan(s). The statement(s) must be dated within 60 days of VA loan closing and maybe an electronic copy of the student loan servicer’s website or a printed statement provided by the student loan servicer. It is the Florida mortgage lender discretion as to whether the credit report should be supplemented with this information.