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3 Significant changes in getting a Home Loan with Student Loan Debt

by | | Last Updated On September 15, 2017

3 Significant changes in getting a Home Loan with Student Loan Debt

Seventy-two percent in a recent survey reported that student loans are the NUMBER ONE reason why those inundated with them aren't buying or financing a home. 

It is true, student loans are taken into account when applying for a mortgage...BUT there are so many changes in Federal Housing Authority programs that have been recently put in place. 

Just last week, Fannie Mae, announced three significant changes to requirements as they pertain to consumers and especially those with student loans and get this, they are effective almost immediately. 

Although these changes may help in qualifying, it is good to make sure your credit is in good shape and in order. Whether student loans are included in calculating debt to income ratio depends on the type of loan. For instance, conventional or VA loans take student loan debt into consideration. One way to offset this is if a home buyer is married and they do not live in a community property state they could rework their finances to reduce debt/income ratios on one side or the other.

So what is a debt-to-income ratio and why does it matter when determining your home purchase when you have student loan debt?

Your debt-to-income ratio is a percentage which shows the amount of your monthly income required to repay your debts.

For example, if you earned $5,000 per month and had a monthly debt obligation of $2,000, your debt-to-income ratio would be 40%. It is to your advanctate, when calculating, to have your debt-to-income ratio under 43%.

There are methods available to reduce your student loan debt and should be considered and examined prior to applying for a home loan. You can request a longer payback period or switch to a graduate repayment program.


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