As we hear more and more about mounting student debt and scrambling to find a solution that will help people 'get out from under it' we get hit with yet another obstacle for those trying to obtain a mortgage with student debt.

FHA mortgages are the most common mortgage obtained because they have the lowest down payment and credit score required. This is a federally backed mortgage and has the most flexibility for borrowers. FHA allowed student debt payments that were deferred 12 months or more to be excluded from their their debt-to-income ratio and therefore would allow them to qualify rather than be denied for high debt.

FHA has recently changed that rule and now includes deferred student loan debt into their debt-to-income calculation to the tune of 2 percent of the student loan amount or about $200 for every $10,000 owed. This rule change can cause some applicants to be denied a loan.

You can look at this rule change as a bad thing but should also be considered good because it can help ensure consumers don't take on to much debt than manageable.

VA loans will not count the student loan debt if the loan is deferred 18-24 months at the time of closing. However it is good to ask the lender as sometimes they will follow the same rules for FHA backed mortgages.

Lastly, don't let this discourage you. Mortgage lenders want to make sure you can pay back the loan, which in the long run is good for the consumer and economy. I would encourage you to call our lender and see what you qualify for, you may be surprised!

Call us today at (505) 923-4691 or use the contact form below.

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