This guide covers getting a mortgage with student loans with high debt-to-income ratio. Getting a mortgage with student loans can often be challenging. Student loans and auto loans are the two biggest barriers affecting borrowers getting a mortgage with student loans due to high debt-to-income ratios.

Professionals such as doctors, dentists, educators, lawyers, and business executives with graduate or professional degrees often had trouble getting a mortgage with student loans.

Average college expenses at four-year public colleges and universities can exceed $30,000 annually. The price tag for four-year private universities is double, exceeding $70,000 per year. Graduate and professional schools can easily cost $100,000 per year. Most folks cannot afford going to college or graduate school without obtaining student loans. Getting a mortgage with student loans is possible. Every loan program has different mortgage guidelines when it comes to student loans.

Is It Possible Qualifying For a Mortgage With Student Loans

Many home buyers with high student loan balances are under the impression that it is not possible getting a mortgage with student loans. For example, a recent homebuyer at Gustan Cho Associates was a government worker making $75,000 per year but had over $280,000 in outstanding student loans. Our borrower had a job as a government attorney and had student loan balances for both his undergraduate and law degrees. The borrower was on an income-based repayment plan (IBR). Never in his wildest dream did he ever think in getting a mortgage with student loans with such a large outstanding balance. However, we helped many borrowers getting a mortgage with student loans. If you are interest to qualify for student loans click here

Getting a Mortgage With Student Loans IBR Payments

HUD, Fannie Mae and Freddie Mac allow IBR payments for mortgage underwriters to use when calculating debt to income ratios. This holds true even on zero monthly IBR payments. As long as you have zero IBR Payments, you can qualify for a conventional loan at Gustan Cho Associates. Every loan program has its own mortgage guidelines when it comes to student loans. It is very possible to qualify for a mortgage with student loans even with high balances. In the following paragraphs, we will outline the particular student loan guidelines on the various loan programs at Gustan Cho Associates.

Hurdles Getting a Mortgage With Student Loans

Getting a mortgage with student loans is a common concern for many individuals. Lenders typically consider various factors when determining mortgage eligibility. Some key points to consider Debt-to-Income Ratio (DTI). Lenders assess your ability to handle additional debt by looking at your DTI, which is the ratio of your monthly debt payments to your gross monthly income. Student loan payments are included in this calculation. Your credit score is an important factor in mortgage approval. Timely payment of student loans can positively impact your credit score.

Student Loan Repayment Status

Lenders may review your student loan repayment history. Consistent, on-time payments demonstrate financial responsibility. Lenders prefer borrowers with stable income. If you have a steady job and income, it can improve your chances of mortgage approval. A larger down payment may help compensate for higher levels of student loan debt. It can also improve your loan terms.

Student Loan Forgiveness Programs

Some government-backed loan forgiveness programs may impact your ability to get a mortgage. Lenders may consider the potential for loan forgiveness when assessing your ability to repay. It’s essential to communicate openly with lenders about your financial situation, including student loans.

Consider getting pre-approved for a mortgage to understand the loan amount you may qualify for. Consulting with a mortgage advisor or financial planner can provide personalized guidance based on your specific circumstances.

Tricks To Getting a Mortgage With Student Loans With High DTI

Millions of consumers have high student loan debt. A large percentage of consumers have their student loan debt in deferment and/or are in an income-based repayment plan. With the exception of VA loans, student loans, even in deferment, are taken into account by mortgage underwriters when they calculate the borrower’s debt to income ratios. There are various tricks and creative strategies to getting a mortgage with student loans. There are certain loan programs borrowers may opt to with higher student loan debts.

Getting a Mortgage With Student Loans By Consolidating Student Loans

Consumers with various student loan debts higher than $10,000 may be eligible to consolidate all or most of their student loan debts at a lower interest rate over an extended term. This will often lower their monthly payments but extend the term of the loan. Lenders are primarily concerned with the monthly debt payments and not the overall outstanding loan balance. The second-largest monthly debt mortgage borrowers have are car payments. Try to avoid buying a new car or trading your old car until after you close on your home loan. Lenders will use all of your monthly payments when calculating your debt to income ratios.

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HUD and USDA Guidelines on Getting a Mortgage With Student Loans

HUD and USDA have the same mortgage guidelines on student loans. Deferred student loans are no longer exempt. This holds true even though the deferment is longer than 12 months. With deferred student loans, mortgage underwriters are required to take 0.50% of the outstanding loan balance and use it as a monthly hypothetical debt. This holds true even though the borrower is not making any payments now or in the foreseeable future. The second option is for the borrower to contact the student loan provider and ask for a written hypothetical monthly fully amortized payment over an extended term. The extended term is normally 25 years. This figure can be used if it turnes out to be lower than the 0.50% of the student loan balance. Gustan Cho Associates will honor the fully amortized hypothetical monthly payment over an extended-term in lieu of the 0.50% number.

VA Mortgage Guidelines on Student Debt

VA has the most lenient student loan guidelines out of any other loan programs. VA loans are the only loan program that exempts deferred student loans that are in deferment for longer than 12 months. In this section, we will cover the VA student loan guidelines. The VA exempts deferred student loans that are in deferment for longer than 12 months.

For non-deferred student loans, the VA requires underwriters to take 5.0 percent of the outstanding student loan balance and divide it by 12. The resulting figure will be the hypothetical monthly debt used by mortgage underwriters.

The second option is for the borrower to contact the student loan provider and ask for a written hypothetical monthly fully amortized payment over an extended termVA loans are the best loan program for owner-occupant primary home loans. However, only eligible active-duty or retired members of the U.S. Armed Forces with a valid Certificate of Eligibility (COE) qualify.

Fannie Mae and Freddie Mac Student Loan Guidelines

Conventional loans have the same student loan guidelines as FHA and USDA loans for home buyers with high student loan balances. Fannie Mae and Freddie Mac allow IBR Payments to be used on student loans. For example, if a medical doctor with a $500,000 outstanding student loan balance has an IBR payment of $200.00 month, that $200 IBR Payment is used by the mortgage underwriter. Conventional loans are the only mortgage program that allows IBR payments.

Getting a Mortgage With Student Loans With a Lender With No Overlays

For more information about this article on getting a mortgage with student loans with a lender licensed in multiple states with no overlays on government and conventional loans, please contact us at Gustan Cho Associates at 800-900-8569. Text us for a faster response. Gustan Cho Associates has no lender overlays on FHA, VA, USDA, and Conventional loans. Or email us at gcho@gustancho.com. The Team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays. Gustan Cho Associates has a national reputation for being a one-stop mortgage shop. This is because we have dozens of lending partnerships with over 220 wholesale lending partners. Many of our wholesale lending partners are non-QM wholesale mortgage lenders. 

Qualify For A Student Loans With No Lender Overlay, Click Here