Changes To FHA Guidelines On Deferred Student Loans

This BLOG On Changes To FHA Guidelines On Deferred Student Loans Was UPDATED On June 26, 2017

Changes To FHA Guidelines On Deferred Student Loans Taking Effect Soon:

Home buyers who are thinking about purchasing a new home this year or are thinking about refinancing their current homes need to know about changes to FHA guidelines.

  • FHA Guidelines will be tougher with regards to deferred student loans.
  • FHA has announced changes to the FHA mortgage insurance premium that home owners will be charged on their home loans.
  • Getting a FHA mortgage loan will be more expensive. 
  • Another major setback for FHA mortgage loan applicants is that they might be obligated to pay FHA mortgage insurance for the life of the FHA mortgage loan.

Changes To FHA Guidelines On Mortgage Insurance Premium

Below is the new FHA mortgage insurance premium charts that explains the upcoming changes to FHA guidelines that compares previous mortgage insurance premiums and the new mortgage insurance premiums.

  • The new FHA mortgage insurance premium guidelines goes into effect for all new mortgage loan applications originated on or after April 1, 2013.
  • If you currently have a 15 year fixed rate  FHA insured mortgage home loan with a Loan to Value of 78% or better, you do not have to pay FHA mortgage insurance anymore. 
  • This is a major savings for those borrowers who currently have a FHA mortgage loan because the FHA insurance premiums are 1.25% of the mortgage amount. 
  • The 78% Loan to Value mortgage insurance exemption will be changing as well beginning on June 3, 2013.

Can FHA Mortgage Insurance Premiums Be Cancelled?

For all mortgages regardless of their amortization terms, any mortgage involving an original principal obligation (excluding financed Up-Front MIP (UFMIP)) less than or equal to 90 percent LTV, the annual MIP will have to be paid until the end of the mortgage term or for the first 11 years of the mortgage term, whichever occurs first. For any mortgage involving an original principal obligation (excluding financed UFMIP) with an LTV greater than 90 percent, FHA annual MIP will have to be paid until the end of the mortgage term or for the first 30 years of the term, whichever occurs first.

For those home buyers whose goal is to buy a house this year, they need to take into account the above changes to FHA lending guidelines.

Update On Changes To FHA Guidelines With MIP And Deferred Student Loans

FHA Mortgage Lending Guidelines has been updated as of January 26, 2015 with regards to FHA mortgage insurance premium.  FHA Mortgage Insurance Premium got reduced to 0.85% from 1.35% for the FHA annual mortgage insurance premium.

Deferred Students Loans that are deferred longer than 12 months is no longer exempt from debt to income ratio calculations on FHA Loans. Under HUD 4000.1 FHA Handbook, deferred student loans are no longer exempt and needs to be counted on DTI ratios. If a FHA Borrower has student loan balance in deferment, they can contact the student loan provider and do the following:

  • Tell them they are applying for a mortgage
  • Tell the student loan provider that they need a fully amortized monthly payment over an extended payment plan.
  • The monthly amortized student loan payment turns out to be 0.50%.
  • If the student loan provider does not provide this written statement, then 1.0% of the student loan balance will be used as a monthly payment.

Mortgage borrowers who have questions on this topic or need to get qualified for FHA Loans can contact us at 1-800-900-8569 or email us at gcho@gustancho.com.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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