Student Loans and Real Estate
Three Different Types of Student Loan Statuses
- Deferred
- Income Based Repayment
- Paid As Agreed
There are three different student loan statuses on your credit report. You will either be in deferred, income based repayment or paid as agreed status.
There are three different student loan statuses on your credit report. You will either be in deferred, income based repayment or paid as agreed status.
Based on FHA & Conventional Loan Guidelines for Student Loans, if you are in deferred or income based repayment, your monthly payment will be based on 1% of your total amount owed. For example, if you owe a total of $50,000 x1% = $500 as a monthly payment
If you are in paid as agreed status and your monthly payment has documentation, then you would qualify based on the amount reported on your credit report. For example, if your monthly payment is $250 and you do not have documentation to provide that the lender will use the 1% of the loan payment rule.
Based on VA Loan Guidelines for Student Loans, if you are a qualifying Veteran with student loan debt, there are two different categories deferred at least 12 months after the loan closing date or deferred less than 12 months of the loan closing date.
VA homebuyers with student loans payments that are deferred greater than 12 months after the mortgage closing will not be counted.
VA homebuyers with student loan payments less that are deferred less than 12 months after the closing date are calculated based on 5% and divided by 12 months. For example, if the loan balance is $50,000, the payment used for the debt ratio will be $208.33
If the student loan is not in deferment status, the higher of the calculation or the payment reporting on the credit report will be used.
Please keep in mind that loan guidelines and lender conditions change. Every real estate home buyer has different experiences with buying a home due to their own credit and income profile. Not one transaction will be the same.
