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Qualifying with Student Loan Debt

Did you know…
Fannie Mae calculates the student loan payment differently depending on the status of the loan.

    • For student loans in repayment, use the payment on the credit report. If the monthly payment is not on the credit report or if the credit report shows $0 as the monthly payment and the borrower is on an income based repayment plan (IBR), obtain documentation to verify the actual monthly payment is $0 and qualify with a $0 payment.
    • For student loans in deferment or forbearance, a payment of 1% of the outstanding student loan balance or a fully amortizing payment must be used in qualifying

Specific to student loans in repayment, Fannie Mae has the more favorable guideline. If the payment on the credit report is $0, Freddie Mac uses 0.50% of the outstanding balance as shown on the credit report as a payment in qualifying.

If any conflict exists between the underwriting tip and Investor guidelines, the published guidelines prevail.

Did you know…

Freddie Mac just updated its policy regarding what payment to use in qualifying for student loans. Now there is a singular approach to student loan debtregardless if in repayment, deferment or forbearance status.

  • If the monthly payment amount is >$0, use the monthly payment amount on the credit report or other documentation provided
  • If the monthly payment amount is $0 on the credit report, use 0.50% of the outstanding balance as shown on the credit report

Specific to student loans in deferment or forbearance status, Freddie Mac has the more favorable guideline. Fannie Mae requires a payment of 1% of the outstanding student loan balance or a fully amortizing payment.

If any conflict exists between the underwriting tip and Investor published guidelines, the published guidelines prevail.

Check out FNMA’s “Student Debt Loan Consolidation Program” (See CF2018-44)

Provides relief to borrowers doing cash out to payoff existing mortgage along with student loan(s) – all cash out LLPAs are waived!

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