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Major FHA Student Loan Monthly Payment Policy.

Mortgage and Lending with George Souto NMLS #65149 FHA, CHFA, VA Mortgages NMLS #65149

FHA just issued Mortgagee Letter 2021-13 revising the FHA policy on student loans.  Prior to Mortgagee Letter 2021-13, FHA required the monthly payments on student loans which were not in repayment or showed a "0" monthly payment on credit reports, to be established at 1% of the outstanding balance.  This policy has had a huge negative impact on the ability of borrowers with students to qualify for a mortgage.  1% of the outstanding balance is far more than student loan monthly payments which are income based, and even larger than student loan monthly payments which are not income base.

The new FHA policy for establishing the monthly payment for student loans have been revised as follows:

If the payment is less than the monthly payment reported on the Borrower’s credit report, must obtain written documentation of the actual monthly payment, payment status and evidence of the outstanding balance and terms of the loan.

The payment amount reported on the credit report or the actual documented payment when the payment amount is above zero; or

0.5% of the outstanding loan balance, when the monthly payment reported on the borrower’s credit report is zero.

The full payment may be excluded when written documentation is provided from the student loan servicer indicates the loan balance has been forgiven, canceled, discharged, or paid in full.

This change reducing calculation of the monthly payment on student loans from 1% to .5% will have a major impact on the ability of borrowers with student loans to qualify for a mortgage they were not able to qualifying for before.

Posted by

George Souto
NMLS# 65149

C (860) 573-1308
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I am a Mortgage Loan Officer who can assist you with all your mortgage & refinancing needs in
CT, and RI

I can assist you with your Conventional,
FHA, CHFA, VA, USDA, & 203K loan programs.

I reside in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Haddam. E. Haddam, Higganum, Chester, Essex, Deep River.


Comments (18)

Kathy Streib
Cypress, TX
Home Stager/Redesign

Hi George you really need to speak with someone who knows mortgages and the changing policies like you do. 

Jun 22, 2021 05:44 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices California Properties - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

the guy needs to be removed from the platform this is the second place I found his robo comment... Now with that said George my friend I remembe when I came back from the military and tried to get a loan... my father paid off my school loan before it... so I would not have a problem when the time came to buy a home... now the current regime will pay off the student loans so it should not be a problem:))Endre

Jun 22, 2021 11:09 PM
James Dray
Fathom Realty - Bentonville, AR

Morning George.

I agree with Endre Barath, Jr. this is the second time I've seen his canned comment.

Jun 23, 2021 12:32 AM
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Hi George - every little bit helps in this market where first time buyers are challenged with affordable homes.

Jun 23, 2021 04:46 AM
Brian England
Ambrose Realty Management LLC - Gilbert, AZ
MBA, GRI, REALTOR® Real Estate in East Valley AZ

He was on one of my posts and I reported him, I reported him again here, I am sure that ActiveRain Member Support will remove him immediately.

This is good news for those with student loans and it makes me wonder why the policy didn't make more sense from the beginning.

Jun 23, 2021 05:00 AM
Ed Silva, 203-206-0754
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

That will be well received by professionals making a decent living and have been rejected because of student debt.  Not to worry as the new government has a plan  to just make the debt go away

Jun 23, 2021 05:11 AM
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

I am not aware of the comment that was made, because I did not see it, and apparently it has been removed.  Thank you everyone who reported it.

Jun 23, 2021 05:56 AM
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

HI George... great update... I'd just heard about this at our office meeting yesterday from our in-house lending team. They are very excited.

Jun 23, 2021 07:52 AM
Rocky Dickerson
Realty One Group - Las Vegas, NV
Superior Service!

Good morning George! I had not heard about this. Thank you for sharing this important information

Jun 23, 2021 08:06 AM
Ginny Gorman
RI Real Estate Services ~ 401-529-7849~ RI Waterfront Real Estate - North Kingstown, RI
Homes for Sale in Southern RI and beyond

George Souto such great FHA information for all of us to know & share with impacted Buyers.  Thank you!

Jun 26, 2021 05:03 AM
Pat Starnes-Front Gate Realty
Front Gate Real Estate - Brandon, MS
601-991-2900 Office; 601-278-4513 Cell

I am thankful for lenders such as yourself who follow the guidelines and keep up with changes that affect borrowers ability to obtain loans. It's an important aspect of the homebuying process.

Jun 26, 2021 04:19 PM
Mark Don McInnes, Sandpoint-Idaho
Sandpoint Realty LLC - Sandpoint, ID
North Idaho Real Estate - 208-255.6227

Great news for those with student loans.  A huge achor to have had drag around for so many years.  This should help a great deal.  Mark

Jun 27, 2021 06:35 AM
Patricia Feager, MBA, CRS, GRI,MRP
Selling Homes Changing Lives

Well, it's about time! I'm glad it applies to all student loans. Thanks George Souto for the good news update! The way it was structured previously was a detriment to many potential home buyers who didn't deserve to be shunned. 

Jun 29, 2021 04:34 PM
Roy Kelley
Retired - Gaithersburg, MD

This is great information to share.

Keep cool, stay safe and have a productive July.

Jul 01, 2021 04:27 AM
Ritu Desai 703-625-4949
Samson Properties - Chantilly, VA
Northern Virginia,Washington DC & Maryland Realtor

With the heat of the market especially at affordable pricing for our 1st time home buyer, any help is a HUGE impact! Thanks for sharing this valuable information.

Jul 01, 2021 06:19 PM
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

I do hope this generation can get some serious relief of the student loan debt did they all seem to  have just fro going to undergrad

Jul 01, 2021 11:03 PM
Troy Erickson AZ Realtor (602) 295-6807
HomeSmart - Chandler, AZ
Your Chandler, Ahwatukee, and East Valley Realtor

Thanks George Souto for keeping us updated on teh FHA policy regarding student loans.

Jul 05, 2021 01:08 PM