January 26th, 2020
Carrying Student Loan Debt when Purchasing or Owning a Home
The numer of Americans carrying student loan debt is growing. A lot of folks believe that with that debt, they cannot qualify for a home loan.
At Honor Mortgage, we have programs specifically for this situation. Some programs will have the borrower add 1% of the total student loan debt added to their DTI (Debt to Income). That can be a heavy burden in some cases and cause your DTI to be too high to qualify.
However, with the right program, borrowers may only need to qualify with the amount of their monthly IDR payment, regardless of the loan balance.
Even if your student loan is in deferment, many lenders will still require you to add the 1% to your total student debt. This can bring your debt above standard requirements and hurt your changes of approval. But, in some cases, we may be able to defer that for up to 12 months after closing on your new home.
Carrying Student Loan Debt
If you own a home think about using the equity in the home to pay for you or your child's college tuition. Even if it is for one year. As a loan officer, I see many folks get into student loan debt that is just too much of a burden financially. For instance, if you are late on your student loans you will have to wait 1 year for that late payment to fall off your credit report before applying for a mortgage. Student loans are considered federal money and can effect your credit history. Get advise from a mortgage loan originator on the best path to take if you are thinking of purchasing or refiancing with student loans.
These programs are not for everyone and may require more of a down payment. They are offered by some of our wholesale lenders. Please ask one of our loan originators for qualifications of these portfolio lending programs. They are not guarenteed and still require credit verification.
Mortgage Loan Oriniator NMLS #1719677