FHA will no longer exclude deferred student loan payments on 9/14/15

A huge benefit within FHA guidelines in regards to deferred student loan payments will go away on 9/14/2015, originally was to expire on 6/15/2015.  For FHA case files assigned prior to this date, borrowers that have student loan payments which are deferred great than 1 year after the closing date do not have to count any payments in their debt ratio.  On 6/15/15, this all changes and with the huge amounts of student debt in the U.S., this will make qualifying for a mortgage loan tougher.

FHA Handbook 4000.1 reads:  (G) Deferred Obligations (TOTAL)

(1) Definition Deferred Obligations refer to liabilities that have been incurred but where payment is deferred or has not yet commenced, including accounts in forbearance.

(2) Standard The mortgagee must include deferred obligations in the Borrowers liabilities.

(3) Required Documentation The mortgagee must obtain written documentation of the deferral of the liability from the creditor and evidence of the outstanding balance and terms of the deferred liability.

The mortgagee must obtain evidence of the anticipated monthly payment obligation, if available.

(4) Calculation of Monthly Obligation The mortgagee must use the actual monthly payment to be paid on a deferred liability, whenever available. 

If the actual monthly payment is not available for installment debt, the mortgagee must utilize the terms of the debt or 5 percent of the outstanding balance to establish the monthly payment.  For a student loan, if the actual monthly payment is zero or is not available, the mortgagee must utilize 2 percent of the outstanding balance to establish the monthly payment

So if you have deferred student loans for greater than 1 year, it would be very important to get qualified under the FHA guidelines prior to 6/15/15 in order to more easily qualify.

This is effective for new FHA case file numbers on or after 6/15/15.  To get an FHA case # buyers need to submit a signed application to our team, we pull credit, and also have either an address for a refinance or an accepted purchase contract on a purchase.

Contact Team Move about FHA or other mortgage product questions to determine which is best for you.

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