Do you have student loan debt? If you are looking to buy a home, there’s some good news that now makes homeownership more affordable!
Here are some things you should know when looking to secure a mortgage with student loans with Minute Mortgage.
During the mortgage application process, your lender will review your finances and assess your student loan payments. These payment amounts will be added to your monthly debt obligations, and will, of course, count toward your debt-to-income ratio (DTI). How these payments are counted depends on your specific loan program. Let’s take a look.
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During the mortgage application process, your lender will review your finances and assess your student loan payments.
Traditionally, we would have to take 1% of the total unpaid student loan balance to qualify for the DTI. As of June 2021, we only have to take 0.5% of the total unpaid student loan balance to qualify for the DTI!
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These changes are in an effort to increase affordability and bring the dream of homeownership that much closer for everyone.
If there is a specific payment reported, they will use that payment amount. However, if the payment is reporting zero because it is in forbearance and/or deferred:
- Fannie Mae will take 1% of the monthly amount of the loan that should have been paid.
- Freddie Mac will take 0.5%.
There is an exception to both of these: If payment reports as zero, Fannie Mae will take zero. Freddie Mac will take 0.5%.
This article was originally published on minutemortgage.com