Changes On FHA Guidelines On Deferred Student Loans
The Federal Housing Administration, FHA, has changed FHA Guidelines On Deferred Student Loans and now is excluding deferred student loan payments that has been deferred for more than 12 months from the calculations of debt to income ratios just like conventional loans. HUD’s new FHA 4000.1 Handbook now states that FHA mortgage lenders cannot discount and exclude deferred student loan payments that have been deferred for more than a year from a mortgage loan borrowers debt to income ratios. This dramatic change on FHA Guidelines On Deferred Student Loans has taken effect on September 14, 2015 and will now reduce a home buyer’s home buying power and the amount a home buyer can qualify for a FHA Loan. Bottom line is that deferred student loan payments will no longer be treated differently than any other monthly debt payments and will be counted towards the borrowers debt to income ratio calculations. It does not matter whether the student loans have been deferred for one to four years, the Federal Housing Administration is now requiring FHA mortgage lenders to count the anticipated projected student loan payment into the mortgage loan borrowers debt to income ratios without any exception to this new rule.
Impact On FHA Guidelines On Deferred Student Loans
The new FHA Guidelines On Deferred Student Loans will drastically be reducing the amount a home buyer can qualify for a FHA Loan. The home buyers that will be affected most by the new FHA Guidelines On Deferred Student Loans will be college graduates, graduates of graduate and professional schools, first time home buyers who recently graduated from technical schools and colleges, and young folks with growing families also known as millennials. Those who have student loans that are deferred and do not know what their monthly projected payment will be after the deferment period is over, the mortgage lender needs to take 2% of the outstanding student loan balance as a monthly debt payment. So if the mortgage loan borrower has a $100,000 student loan balance which is in deferment and does not know the projected monthly payment after the deferment period is over, the mortgage lender will take 2% of the $100,000 or $2,000 as a monthly debt payment and calculate it towards the calculation of the borrower’s debt to income ratios.
Community Property States
Home buyers who purchase a home in community property states like Wisconsin and California and having a non-borrowing spouse with deferred student loans may no longer qualify for a FHA Loan since the debt of the non-borrowing spouse is included in the calculation of the debt to income ratios. Non-borrowing spouses who have not just undergraduate degrees but also either professional degrees such as a master’s degree or law degree, or medical degree, the student loan balance can be extremely high. Doctors and lawyers can have student loan balances of upwards of $200,000 or more and 2% of that balance can exceed $4,000 per month which can be more than the monthly proposed mortgage payment. The only mortgage loan program that excludes deferred student loan from debt to income ratio calculations are VA Loans. All other mortgage loan programs such as FHA Loans, USDA Loans, and Conventional Loans all excludes deferred student loan payment and will count 2% of the deferred student loan balance towards debt to income ratio calculations if the student loan provider does not provide an exact proposed monthly payment after the deferment period is over. For mortgage loan borrowers who have a high student loan balance and due to the high balance cannot qualify for a FHA Loan due to high debt to income ratios, the only option will be to have a strong non-occupant co-borrower to qualify for the FHA Loan.