Do Mortgage Lenders Look at Deferred Student Loans?

Mortgage and Lending with Equity Resources NMLS 67179 Licensed in NC

You probably aren’t making Student Loan Payments right now.  Nobody is.  The Government put Student Loan Debt in a deferment, and you don’t have to make payments in 2022.  But maybe you should be making payments.  We take questions on this Blog, and we’ve been asked, “Do Mortgage Lenders Look at Deferred Student Loans?”  The answer is a resounding YES!

In March of 2020 the US Government passed the Cares Act, and with it – made Student Loan Debt “goaway” for millions of people. This was presumably going to happen for just a few months, but it’s gone on for more than 2 years now. This is NOT a Political Post. I’m wanting to give folks information on what they can, and problably SHOULD be doing now so that they can buy a home!

Do Mortgage Lenders Look at Deferred Student Loans?

Yes. We have to consider the debt. However, the first thing to consider is that the Deferment of Student Loan Debt is scheduled to expire on August 31, 2022. So far, there’s been mention of an extension of the deferment. If that doesn't happen, you will be making payments in just a few days.

If for income reasons, some of your deferred student loans stay, well, deferred – what happens then?

Let’s say you have $100,000 in Student Loan Debt. If that’s deferred, we still have to count .5% of the balance against you as a payment. In this case, that would be $500.00.

If you place that $100,000 in Income Based Repayment Plans, and the actual payment is only $175, then there are loan programs that allow us to use $175. That gives you $325 a month more qualifying power ($500 – $175).

Interest rates are close to where they were when we went into the Pandemic. So far, we haven’t seen predictions that student loan payments will be substantially higher than they were in February of 2020.

However, The Fed (the guys who really direct interest rates) has said they need interest rates to go higher so that they can stop Inflation. Higher rates, will generally mean higher student loan payments, and when that happens – trust me – the guidelines for Student Loan Debt will change again.

We have been paying on our Student Loan Debt (for our daughter) during this time. We figured while it wasn’t accuring Interest, we could have the whole payment go to the debt. We think this is a good idea for everybody. READ: If your student loan debt gets deferred, make some kind of payment anyway. The idea is to get rid of debt – right?

Do Mortgage Lenders Look at Deferred Student Loans? YES!

Even if you aren”t REQUIRED to make a payment due to Deferred Student Loans, we count a debt.

And, you SHOULD be figuring out how to buy a house right now, while the cost of housing is coming down some, it's easier to "Win the Bid". If you are paying rent, you are paying to build someone else’s wealth. You are paying someone else’s mortgage. Your Housing Payment each month is not really HELPING you. Buying a house creates Generational Wealth. Meaning, it creates wealth that you can pass on to your family over time. So buying a house, makes sense, especially now.

If your student loans are in a deferred status, we count them, even if you are not making payments. If you have them in Income Based Repayment (IBR), and it is REPORTING on the Credit Report, then we can count that payment.

Even if the IBR is a $0 payment, we can count the $0 payment as long as it is reporting to the credit bureau that way. If the student loan payment rAnother question we had was: “Can we use Student Loan Grants to cover some of our Closing Costs?” No, you can’t use proceeds you receive from Student Loans to cover your closing costs. We can’t count Student Loan Proceeds as income either. It’s to cover the cost of higher education, and that’s what you will need to use the money for.

There are several down payment assistance programs that might help in the purchase of a home, and in North Carolina, we have multiple areas in every county that qualify for USDA Home Loans. Of all of the mortgage programs available for First Time Home Buyers – USDA Home Loans are our favorite... you don't have to have a TON of cash to get into a house in NC right now.

Bottom line, If your Student Loans are DEFERRED, then we count a percentage of the balance, normally .5 percent.  Put them in Income Based Repayment plans to qualify for a bigger house!  At the VERY LEAST make some kind of payment anyway. The idea is to get rid of debt – right?

If you have more questions about Deferred Student Loans and getting a mortgage, call us! Steve and Eleanor Thorne 919 649 5058 we concentrate our business on First Time Home Buyers and helping them get into their dream homes! Apply online NOW, and we’ll get right back to you!

Originally posted at

Leanne Smith
Dirt Road Real Estate - Golden Valley, AZ
The Grit and Gratitude Agent

My question is why wouldn't lenders look at student loans as this is debt? Great advice for those who believe deferred payment is not a debt.

Aug 24, 2022 09:49 AM
Steve and Eleanor Thorne

Tottaly agree! Good point!

Aug 25, 2022 12:57 PM
Bill Salvatore - East Valley
Arizona Elite Properties - Chandler, AZ
Realtor - 602-999-0952 / em:


Enjoyed your blog page, and I added you as a friend. I would love the follow back. Thanks Bill

Aug 24, 2022 12:58 PM
George Souto
George Souto NMLS #65149 - Middletown, CT
Your Connecticut Mortgage Expert

Eleanor Thorne this is great information.  These deferred student loan payments are a major obstacle for anyone with deferred student loan payments trying to purchase a home. 

Aug 24, 2022 02:04 PM
Eleanor Thorne

I agree, and if you can go into a payment plan, maybe that's a better option?

Aug 25, 2022 12:59 PM
Kris Collis, Associate Broker
Smart Way America Realty - East Stroudsburg, PA
Professional Results you Expect 570-801-5525

Thank you for posting this valuable info separating fact from fiction.

Aug 24, 2022 05:49 PM
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

Mortgage lendIng is in no way my particular area of expertise per se, but you definitely do have it

Aug 24, 2022 11:58 PM
Richard Weeks
Dallas, TX
REALTOR®, Broker

Great information, thanks for sharing.  I hope you have a great day.

Aug 25, 2022 02:39 AM
Patricia Feager, ABR,CRS,GRI,MRP
Selling Homes Changing Lives

Eleanor Thorne - Congratulations on your well-deserved FEATURE for ActiveRain. Everyone should read this with eyes-wide open. Anyone with Student Loan Payments would be wise to make decisions based on fact and reliability. Yes! I agree with George Souto and Richard Weeks that you have provided information that is great and valuable. Thank you, very much. 

Aug 25, 2022 03:35 AM
Dorie Dillard Austin TX
Coldwell Banker Realty ~ 512.750.6899 - Austin, TX
NW Austin ~ Canyon Creek and Spicewood/Balcones

Good morning Eleanor Thorne ,

What a timely post! Congratulations on your featured post..well deserved! Your information is very informative and many should read up as why should lenders not be looking at deferred debt? It figures in the eqauation..great advice.

Aug 25, 2022 05:22 AM
Eleanor Thorne

Thank you so much!  I was surprised to be featured!

Aug 25, 2022 12:58 PM
Carol Williams
Although I'm retired, I love sharing my knowledge and learning from other real estate industry professionals. - Wenatchee, WA
Retired Agent / Broker / Prop. Mgr, Wenatchee, WA

Hi Eleanor,
Thanks for getting this timely post out!  Student loan debt is certainly a hot topic right now.

Aug 25, 2022 07:22 AM
Robert Rauf
CMG Home Loans - Toms River, NJ

I've been doing more Freddie than Fannie because of this!  It is crazy that people stop paying them just because.... we have the lowest UE rate in decades and people are ignoring a big debt monster that can bite them hard.  (didn't SLs just get extended AGAIN to the end of the year?? if you want to control inflation take that extra billion in SL payments out of the discretionary spending pocket!!)

Aug 25, 2022 07:42 AM
Eleanor Thorne

Yeah, it's crazy the way it looks like it might work out.  While they aren't accruing interest, it might make sense to pay some of it down?

Aug 25, 2022 01:00 PM
Jan Green - Scottsdale, AZ
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Great information!  This will help so many with questions about student loans and mortgages.  I love your idea of paying toward the debt when payments aren't required.  Makes great sense.  

Aug 25, 2022 03:31 PM
Debra Leisek
Bay Realty,Inc Homer Alaska - Homer, AK

Great post and provides much good information.  Paying now while they don't accrue interest is especially good advice. 

Well Deserved Feature!!

Aug 26, 2022 12:23 AM
Dorte Engel
RE/MAX Leading Edge - Bowie, MD
ABC - Annapolis, Bowie, Crofton & rest of Maryland

Dear Eleanor,

Borrowers have 4 more months to make payments that count entirely against principal. After that, payments will resume, but they can take some money off on their taxes, as I understand it, so that may help with affordability down the road, because young people might be able to knock out their debt more quickly.

Aug 26, 2022 08:24 AM
Eleanor Thorne

Great point, thanks for the clarity

Aug 31, 2022 07:55 AM
Dr. Paula McDonald
Beam & Branch Realty - Granbury, TX
Granbury, TX 936-203-0279

A timely post in light of what POTUS is proposing regarding student debt. 

Aug 26, 2022 02:38 PM
Roy Kelley
Retired - Gaithersburg, MD

This is good information to share.

Have a great day and a very productive week.

Sep 01, 2022 02:59 AM