Do Student Loans Kill Your Mortgage Chances? (Yeah… No.)

A lot of homebuyers think student loans automatically disqualify them from getting a mortgage -
but that's simply not true. Student loans don't kill your mortgage chances.
They just affect how much house you can qualify for.
Understanding how lenders calculate your student loan payments is the key to planning ahead.

Many buyers assume deferred student loans don't count against them, but lenders still treat these balances as
future debts. Here's how each loan type estimates your monthly payment when none is listed on your credit report:

• Fannie Mae: Counts 1% of your loan balance as a monthly payment.
• Freddie Mac & FHA: Use 0.5% of the loan balance.
• VA Loans: Use 5% of the balance divided by 12.

For example, if you have $40,000 in deferred student loans, FHA will count
$200 per month toward your debt-to-income ratio (DTI).
This doesn't disqualify you - it just reduces the maximum mortgage amount you may qualify for.

If your credit report shows a monthly payment - even if it's $0 on income-based repayment - lenders use
that amount instead. This can dramatically help you qualify for more home.

Student Loans Don't Stop You From Buying a Home

Student debt alone rarely kills a mortgage. What matters is how the estimated payment affects your
DTI ratio, which is a major factor in determining your approved loan amount.

So even if you've racked up student loan debt because you spent five years in art school…
don't count yourself out. You absolutely can qualify.
The smartest thing you can do is ask Galaxy Lending Group how your loans impact your qualifying numbers.

Later, Nerds!