The payment used in qualification matters
Lenders calculate a debt-to-income ratio using qualifying income and counted monthly debts. Student loans can affect this ratio even if payments are deferred or currently show as zero.
The required counted payment depends on the mortgage program and the documentation. Different guidelines can treat deferred or income-driven repayment loans differently.
Don't assume a zero payment means zero debt
If a loan is in deferment or forbearance, an underwriting rule may require a calculated payment. Obtain the current student loan statement and documentation of the repayment plan.
An accurate review helps avoid surprises after a buyer goes under contract.
Compare the full monthly housing cost
Your housing payment may include principal and interest, taxes, homeowners insurance, mortgage insurance and HOA fees. A comfortable total payment is more important than borrowing the maximum allowed.
Consider emergency savings and other expenses that might not appear on a lender's debt-to-income calculation.
What to do before applying
Check your credit, organize your student loan account documents and review your current repayment plan. Avoid changing repayment arrangements without understanding the effects.
Ask your loan officer which monthly student-loan figure will be used and why.
Frequently asked questions
Do I have to pay off my student loans first?
Not necessarily. Many buyers qualify while making student loan payments.
Does income-driven repayment automatically disqualify me?
No. Treatment depends on the loan program and the documentation of the payment.
Discuss your mortgage options
Every loan scenario is different. Sarah can help review eligibility, program terms and tradeoffs for your situation.
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