If a monthly student loan payment ( >$0) is provided on the credit report, you may use that amount for qualifying purposes.
If the credit report does not provide a monthly payment for the student loan, or if the credit report shows $0 as the monthly payment, the lender must determine the qualifying monthly payment using one of the options below.
- If the borrower is on an income-driven payment plan, the lender may obtain student loan documentation to verify the actual monthly payment is $0. The lender may then qualify the borrower with a $0 payment. File must contain documentation that the payment is an Income driven payment plan (also known as IBR or Income Based Repayment)
- For deferred loans or loans in forbearance, the lender may calculate (a) a payment equal to 1% of the outstanding student loan balance (even if this amount is lower than the actual fully amortizing payment), or (b) fully amortizing payment using the documented loan repayment terms.
This applies to both purchase and refinance loans so call me to discuss more options on qualifying for a home loan when you have student loans! For more great content on how your purchase power is affected by student loans click here.
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