Fannie Mae Simplifies Guidelines for Student Loan Debt

Mortgage and Lending with NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 IL Lic 031.0006220/WI


Fannie Mae Simplifies Guidelines

for Student Loan Debt

 Tackling Student Loan Debt
It's been a long time coming, but Borrowers that hold Student Loan Debt may have finally caught a break ...
Made effective on April 25, 2017, Fannie Mae gave Mortgage Lenders a much more definitive process with which to calculate Student Loan Debt ... a simplification that was definitely needed and long waited for. Until this change, it had been a real challenge for Mortgage Lenders to compute the actual Student Loan Debt of a potential Borrower.
Not all Student Loans get repaid in the same way.  Nor do all Student Loan Services report Student Loan Debt the same way to the Credit Bureaus.  The waters were pretty muddy for Lenders as to how to use the info available, (if it was available at all). 
This new change by Fannie Mae addresses the Debt-to-Income - Qualifying  (DTI) ratio calculations used by Mortgage Lenders while considering Student Loan Debt.  
The new simplification states:  
     Mortgage Lenders can now accept the Student Loan Debt payment amount listed on a Credit Report.  If the Student Loan Debt does not appear on the Credit Report, Mortgage Lenders can use 1% of the outstanding debt ... or ... a manually calculated, fully amortizing payment.  
While this simpler approach won't help every potential Borrower, it removes some financing obstacles and makes it easier for Mortgage Lenders weighing mortgage approval for those applicants with Student Loan Debt.  It should open the door for more potential Borrowers with Student Loan Debt to qualify for a Mortgage and buy homes.
April was a busy month for Fannie Mae, as they also announced they're loosening another lending guideline.  
The guideline referred to now reads:
  • Certain debts paid by non-Borrowers can be omitted from a Borrower's Debt-to-Income - Qualifying Ratios (DTI) when the past 12 months of payments have been made satisfactorily.  (This addresses debt reporting on a Borrower's Credit Report (such as credit cards, auto loans, and student loans) that is paid by someone other than the Borrower.


It also addresses possible Refinance opportunities:

  • Student Loan Cash-Out Refinance: Offers homeowners the flexibility to pay off high-interest rate student debt while potentially refinancing to a lower mortgage interest rate.  

These announcements are positive signs as they provide hope, assistance, and relief to those with Student Loan Debt.  They are also an indication of a "relaxing" lending climate as we head into the busy summer real estate market.  
At minimum, they show a general movement in the right direction to address the crushing Student Loan Debt keeping so many young Americans out of the housing market.  These timely changes should allow more of these types of Borrowers to qualify for Conventional Loans.
So, what should a hopeful New Lenox - Chicagoland Home Buyer/Borrower with Student Loan Debt do next?  
Take the following step-by-step action: 
  • Assess your Student Loan accounts
  • Educate yourself on ALL options available to you regarding your Student Loan Debt
  • Make adjustments to your accounts that address your current and long-term needs
  • Seek guidance and assistance from me, your Mortgage Originator.  Ask questions! 
These recent changes will have an impact.  Avenues to gain Mortgage Approval will be opened for many.  Does that include you?  To know for sure, you need to ask questions and take action to find out.
If you're hoping to buy a New Lenox - Chicagoland home, take that action now.  Contact me to discover what financing options are currently available to you ...



* Looking to find what possibilities exist for you?Hoping to Buy or Refinance a Home in New LenoxWill County, or elsewhere in the Chicagoland area? Contact me!  I'll put my 40+ years of Mortgage experience and expertise hard to work on your behalf.
I'm easily found at:

Gene Mundt

Mortgage Originator - nmls #216987 - IL Lic. 031.0006220 - WI Licensed

American Portfolio Mortgage Corp.
nmls #175656


Direct:  815.524.2280

Cell/Text:  708.921.6331

eFax:  815.524.2281

American Portfolio Mortgage Corp.

NMLS #175656
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Gene Mundt

 Mortgage Originator  -  NMLS #216987    

                                 IL Lic. #031.0006220  -  WI License #216987                                                                                                    

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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Nick & Trudy Vandekar, 610-203-4543 05/02/2017 01:44 PM
  2. Gabe Sanders 05/11/2017 11:40 PM
Home Buying
Illinois Will County New Lenox
Chicago Area Real Estate BUZZ!
1st Time Buyers
student loans
student loan debt
mortgage lenders calculating student loan dti
fannie mae student loan debt changes
financing a home with student debt
millennial student loan debt and buying a home

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Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude - Carlsbad

Hi Gene

This is great news for some buyers. Every little bit can help. We can always count on your to keep us up to date on mortgage updates.


May 02, 2017 06:40 AM #9
Rob Spinosa
Guaranteed Rate, Marin County, CA - San Anselmo, CA
Vice President of Mortgage Lending, Marin County

Most definitely steps in the right direction and let's not forget the powerful influence of FNMA on the rest of the industry.  Getting greater clarity on student loan qualification payments helps prevent challenges down the road for every borrower who carries this kind of obligation.

May 02, 2017 06:41 AM #10
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

Anything to help these students drowning in debt is good including the messengers of this good news too. I remember being pitched funds constantly and being tempted when I was in college and refused it all...thank you God. Student debt follows you to your grave as it is a lien for life against you till paid

May 02, 2017 06:42 AM #11
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Good Morning Gene - that can be confusing.  My daughter and her husband bought their first house.  They were fine but others not so much.

May 02, 2017 07:03 AM #12
Noel Mayer

Thank you for sharing this great informational update.

May 02, 2017 08:42 AM #13
Sybil Campbell
Long and Foster REALTORS® 5234 Monticello Ave Williamsburg, Virginia - Williamsburg, VA
REALTOR® ABR, SFR, SRES Williamsburg, Virginia

Gene, thanks for the info for prospective home buyers who have student loans.

May 02, 2017 08:48 AM #14
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of Manchester NH's Leading Agents

Those are all positive steps Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi . I am seeing more and more buyers with student debt, 

May 02, 2017 09:37 AM #15
Dick Greenberg
New Paradigm Partners LLC - Fort Collins, CO
Northern Colorado Residential Real Estate

Hi Gene - That's very positive news and should help a lot with buyers carrying student debt. Thanks for the update!

May 02, 2017 12:44 PM #16
Nick & Trudy Vandekar, 610-203-4543
Long & Foster Real Estate Inc 610-225-7400 - Devon, PA
Tredyffrin Easttown Realtors, Philly Main Line

Great news, so many think they cannot qulify and these new guidlines will make it easier for many to begin the journey.

May 02, 2017 01:32 PM #17
Anna Banana Kruchten CRB, CRS, Broker
Phoenix Property Shoppe - Phoenix, AZ
Arizona's Top Banana of Real Estate!

Gene this is all great news and I so appreciate you keeping us all in the loop. So many changes going on now - for the better I might add.

May 02, 2017 02:50 PM #18
Beth Atalay
Cam Realty and Property Management - Clermont, FL
Cam Realty of Clermont FL

Hi Gene, this is great information for some buyers, thank you for sharing the great news.

May 02, 2017 06:28 PM #19
John Wiley
Right Move Real Estate Group- EXP Realty - Fort Myers, FL
Lee County, FL Real Estate GRI, SRES,GREEN,PSA

Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi 

thanks for helping us understand what the new guidelines on student loans means.

This means there will be new opportunities for some people who really want to become home owners but could not because of student debt.

I think this is a welcome change.

May 03, 2017 05:59 AM #20
Dörte Engel
RE/MAX Leading Edge - Bowie, MD
ABC - Annapolis, Bowie, Crofton & rest of Maryland

Dear Gene,

Student loans are one of the big obstacles in our market too. Anything to help a few people get out of or restructure that debt will help them get on with their lives.

May 03, 2017 09:34 AM #21
Lou Ludwig
Ludwig & Associates - Boca Raton, FL
Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC


Thanks for sharing the information on the guidelines for student loan debt.

Good luck and success.

Lou Ludwig

May 03, 2017 07:53 PM #22
Lou Ludwig
Ludwig & Associates - Boca Raton, FL
Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC


Congratulations on the gold star feature for an informative post.

Good luck and success.

Lou Ludwig

May 03, 2017 07:55 PM #23
Donna & Larry Johnson
Keller Williams Real Estate - West Chester, PA
Chester & Delaware County

This is great news for buyers. Sometimes the last hurdle to get over.

May 04, 2017 08:03 AM #24
Patricia Feager
Selling Homes Changing Lives

Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi - It's about time!!! Thanks for sharing the good news! 

Congratulations on the feature too!!!

May 06, 2017 04:29 PM #25
Paul S. Henderson, REALTOR®,CRS,
RE/MAX Professionals. - Tacoma, WA
Tacoma Washington Agent/Broker & Market Authority!

We had a great discussion about this at our sales meeting this week and I also heard that Freddie Mac was also working on the same issue Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi 

May 13, 2017 11:15 PM #26
Debbie Walsh
Shahar Management - Middletown, NY
Hudson Valley NY Real Estate 845.283-3036

This is definitely great news and should relieve a lot of potential buyers.

May 15, 2017 04:23 AM #27
Dave Halpern
Keller Williams Realty Louisville East (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

That will enable much more people to qualify for a mortgage and get into homeownership.

Jul 18, 2017 11:28 AM #28
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