Can Student Loans Affect Mortgage Eligibility?

For many graduates in the U.S. leaving school with a huge amount of student loan debt, the idea of owning a home is a dream that may not be able to be realized. However, the Federal Housing Administration has recently given some students a bit more hope in that regard. The FHA has recently lowered the threshold used to calculate the amount of deferred student loan repayment estimates in order to allow recent grads the opportunity to receive a home loan despite the debt load they may face upon graduating.

Because deferred student loan debt does not have a set monthly amount of repayment calculating the debt to income ratio is a little trickier for lenders and for this reason the FHA loans are more popular as they are insured by the Federal Government. Prior to the rule changes, the FHA the amount of debt to income ratio was calculated by taking 2 percent of the outstanding loan as the amount of the monthly payment which excluded many potential home owners from being able to enter the market. This amount has been lowered to only 1% which may not seem like a huge amount but will open the door for many more grads to qualify and still minimize the risk for lenders.

As another blog suggests prudently, just because you may be able to now qualify for that mortgage does not necessarily mean that you want to take on that additional debt load. Make sure that you do your due diligence before jumping in with both feet. If we have learned anything from the past it is that nothing is certain and that markets can change very quickly. If you are having difficulty with your student loan situation be sure to speak to a student loan debt relief attorney.