Debt to Income Ratio for FHA Loans

[Aakash Sundar]

I'm a younger guy (23), just graduated college with a bunch of debt. Looking to get into house hacking for obvious reasons, and was wondering whether my large student loan would affect my ability to receive an FHA loan??

[Chace Fraser]

Hi @Aakash Sundar and welcome to BP! House hacking is an incredible way to get into buy and hold investing with a relatively low financial barrier to entry. 

There are a lot of factors when it comes to determining your maximum DTI ratio (credit score, cash reserves, etc). Here is an article that goes into DTI and what factors influence it.

However, the fastest way to get your questions answered, and/or to find out how much you qualify for, would be to speak with a lender. They're not scary, I promise. They're there to help you. Believe it or not, they want to help you and lend you money. They're looking for ways to lend you money, not excuses not to lend you money. If they are able to get you to qualify for a loan, and you use them as a lender, they get paid. They want to give you money.

However, keep in mind that, because they want to give you money, they're going to tell you what you want to hear and may not be looking out for your best interests. When it comes to finding the right lender there are a few things you’ll want to keep in mind. Lenders, like realtors, are not all created equal. In order of importance, here’s what I think is important to look for in a lender. You want to make sure your lender:

• Has worked with house hackers before; the rules change depending on what loan type you use and how many units you purchase. There are A LOT OF TRAPS along the way that can/will make the deal fall through (and cause you to lose your earnest money). You want to be sure the lender you choose has navigated them before.
• Can help you strategize the lending piece for this purchase AND purchases in the future
• Is an investor themselves

If you’d like a recommendation for a lender DM me. I have one that I have closed many house hacking sales with (my own house hack included), and checks off all of the boxes above as well. Not to mention she’s licensed in all 50 states.