VA Guidelines On Deferred Student Loans And Debt To Income Ratio
This BLOG On VA Guidelines On Deferred Student Loans And Debt To Income Ratio Was UPDATED On August 13, 2017
What Are VA Guidelines On Deferred Student Loans
One of the best benefits available to Veterans of the United States Armed Services is that they are eligible to qualify for VA Loans.
- The Gustan Cho Team at USA Mortgage is an aggressive VA Lender with no lender overlays.
- The U.S. Department of Veteran Affairs (VA) is the government agency that creates and implements VA Guidelines.
About VA Loans
VA Loans have much lenient guidelines than any other loan program. The Department of Veteran Affairs realizes that veterans may have less than perfect credit due to their careers in the U.S. Military while in active duty, especially soldiers who have been deployed.
- VA Loans is hands down the best mortgage loan program available today where there is no down payment requirement.
- Mortgage interest rates on VA Loans is one of the lowest mortgage rates than any other mortgage loan program.
- VA does not originate, fund, or service VA Loans.
- VA insures VA approved mortgage lenders, who are banks and private mortgage lenders in the event borrowers against default on their VA Loans and the mortgage goes into foreclosure.
- Unfortunately, VA Loans are only for Veterans of the U.S. Armed Forces who have a Certificate of Eligibility .
- Many VA mortgage loan borrowers who had a foreclosure with a prior VA Loan may still qualify for another VA Loan.
- There are many times where a VA mortgage loan borrower may not qualify for a VA Loan due to not getting an automated underwriting system approval but may qualify for FHA Loan.
- They may go with FHA Loan first and refinance to a VA Loan at a later date.
Student Loans And Debt To Income Ratios
Student loan debt is calculated by mortgage lenders in the calculations of the mortgage borrowers debt to income ratios. What are deferred student loans?
- Deferred Student Loans are student loan payments that have been deferred by the student loan provider.
- Deferred does not mean forgiven.
- No minimum monthly payments need to be made for a certain period of time.
- Student loans can be a major hurdle when it comes to qualifying for a mortgage loan.
- There are folks who have tens of thousands of dollars of student loan balances, especially those with graduate and/or professional educations.
- A medical doctor, dentist, or lawyer can have student loan balances of over $100,000 plus.
- Most mortgage loan programs require that deferred student loan debt be calculated in the calculations of the mortgage loan borrower’s debt to income ratios.
- Conventional Loans always required that student loan debt payments be calculated in the calculations of the Conventional mortgage borrowers debt to income ratios, even deferred student loans.
- New guideline changes has taken effect.
- All deferred student loans, even student loan payments that has been deferred by 12 or more months, now need to be counted in the DTI Calculations on all government and conventional loan programs with the exception of VA Loans.
- Fannie Mae and Freddie Mac, the two mortgage giants who sets Conventional mortgage lending guidelines, require :
- 1.0% of the student loan balance be used as a monthly debt on all deferred student loans and/or:
- Contact the student loan provider and get a fully amortized monthly payment amount over an extended payment plan (which is normally 25 years)
- High student loan balances can disqualify any mortgage loan borrower
- Many professionals with graduate and professional degrees and high student loan balances such as medical doctors, dentists, teachers, or attorneys have difficult time getting qualified for mortgage loans.
FHA Guidelines On Deferred Student Loans
FHA Guidelines On Deferred Student Loans used to exempt deferred student loans that has been deferred by at least 12 or more months.
- However, under HUD 4000.1 FHA Handbook which was launched on September 14, 2015, deferred student loans that has been deferred for 12 or more months are no longer exempt from the FHA mortgage borrower’s debt to income ratio calculations.
- Under HUD 4000.1 FHA Handbook, FHA borrowers with deferred loans of 12 or more months are no longer exempt.
- They will need to have a fully monthly amortized payment amount over an extended term provided by the student loan provider.
- It needs to reflects what the monthly fully amortized student loan payment will be in writing.
- FHA borrowers who cannot provide this monthly amortized payment, the lender will use 1.0% of the outstanding student loan debt balance as the monthly payment.
2017 VA Guidelines On Deferred Student Loans
VA Guidelines On Deferred Students Loans are much more lenient than any other government loan and/or conventional loan program. VA Loans is the only mortgage loan program that exempts student loans that are deferred from DTI Calculations. However, the student loans needs to be deferred at least 12 months.
- Veterans borrowers with deferred student loans are exempt from student loans being counted int debt to income ratio calculations.
- The deferment needs to be at least 12 months or longer from the date of VA Loan closing.
- If Veteran Borrowers can meet these terms, student loan debt payments will be exempt from your debt to income ratios calculations.
- This is a huge benefit for VA Loan Programs where it does not apply to any other mortgage loan program.
Other Benefits Of VA Loans
Again, one of the greatest benefits that our government rewards our veterans is by offering VA Loans. Qualified Veteran borrowers can qualify for VA Loans with the following:
- 100% Financing
- 100% cash out refinance
- 580 Credit Scores or lower as long with an approve/eligible per AUS FINDINGS
- VA does not have a minimum credit score requirement
- 2 year waiting period after Chapter 7 Bankruptcy
- 2 year waiting period after short sale
- 2 year waiting period after foreclosure
- 2 year waiting period after deed in lieu of foreclosure
- No debt to income ratio requirement: I recently closed on a VA Loan with a 580 FICO and 60% DTI veteran home buyer
Veteran home buyers who need to qualify for VA Loans with a lender with no lender overlays, please contact The Gustan Cho Team at USA Mortgage at 1-800-900-8569 or email us at firstname.lastname@example.org. We are available 7 days a week, evenings, weekends, and holidays.