Prior to September 2015, if you had a student loan debt in deferment at least 12 months past the closing date, those debts weren't counted against you as far as how much mortgage you could qualify for. The rule that changed last fall now states that if a payment is in deferment or the payment is zero (like an income-based repayment plan), they now require us to use 2% of the balance as a payment toward your debt ratio.
So what does this mean? If you have $50,000 worth of student loans in deferment, that is the equivalent of $1,000 a month that we now need to count against you as far as how much you can qualify for. That's almost like a whole other mortgage payment. Obviously, this has had a huge impact on people, especially those with large student loan debt loads.
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Don't let this change keep you from getting into your next home.
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There are some workarounds however. Even though a student loan debt is in deferment, we've had some successes contacting student loan companies and requesting to get an estimated payment of what the payments would actually be once the deferment expires. In many cases, that payment is far less than the 2% payment that we have to use if we don't have any payment at all. In those cases, we're able to use that estimate because the lender at least has an idea of where that payment is going to be once the deferment is over.
So like I always say, the best thing to always do is to get out ahead of the home buying process. If you have student loan payments, reach out to us early in the process and come in for a consultation where we can review and see where we stand. Then we can see if we can come up with some solutions to make sure this change doesn't keep you from getting into your next home.
