Financing for a house hack

[Inga Fonder]

Good morning everyone,

I'm trying to get into real estate investments using the house hacking method for my first property. I've found a realtor to work with and am now working with someone in order to receive financing. However, I'm currently a graduate student in IL, and have loans that don't have monthly payments being reported because they're in deferment. I do have a steady monthly income from working at the university. Even so, the mortgage lender informed me that due to federal laws, the way student loans are reported has a significant impact on the amount I can be provided. 

It was suggested that I contact the Federal Loan agency to have the loans taken out of deferment, and begin reporting monthly payments. This process can take 1-3 months depending on how quickly they handle the request. Currently, I'd only be able to take out a mortgage loan for 60-70k, but the amount would more than double if the student loans were removed from deferment.

Has anyone had experience dealing with a similar circumstance? If so, what's an ideal way to approach the situation in order to move forward? I appreciate any input or suggestions.

-Inga

[Zack Karp]

With student loans, it's different for Fannie, Freddie, FHA, and VA. All have different guidelines surrounding what you must use for qualifying payments.

With deferred loans, however, it's pretty consistent that you must use 1% of the balance as the qualifying monthly payment.

One work-around is to go on an income based payment plan.  You can slash your monthly payments that way, and Fannie WILL use the IBR payment for qualifying, even if it's $0.  I have helped many buyers with student loans qualify for a much higher home price using this little known strategy.

Hope that helps?  Best of luck!