FHA Guidelines on Student Loans Calcs for Ratios

[Letisia Crespo]

I am receiving conflicting information from different lenders, when it comes to the way student loans are calculated toward ratios when obtaining and FHA loan.

While I did some research and found the verbiage directly on HUD's portal. (Hud's Portal)

It seems it's still interpreted differently depending on who I ask. From one aspect I told the monthly payment being reported on the credit report can be used and no other information would be needed.    

While on the other hand I am being told it would need to be 1% of the loan balance , because many students may be on a income repayment plan which would mean there payments are not fully amortized. 

Can any one who has processed these scenarios please help explain which is it? 

Thanks so much!

-Letisia 

[Michael Cohen]

You use the actual documented payment, provided it will fully amortize. This means you cannot use income based repayments. If you cannot get actual documented payment (i.e. in deferment, in school still, etc.), then you must use the GREATER of 1% or the amount reported on the credit report. 

Student Loans are stopping a LOT of borrower's from being able to afford a house, unfortunately. We all expect these rules to change soon, but who knows when...