How Does Student Loans Affect A Mortgage Loan Approval in Kentucky ?

As more Kentuckians go back to school to further their education, this usually involved for some people student loans to finance their post-secondary high school education. Below I did a summary for the different types of loans for Kentucky Home Buyers and owners for:, FHA, VA, USDA, Fannie Mae and how each loan program effects the borrower and their status of getting a loan approval.

Bottom line is this: They have made it tougher to qualify for a Kentucky Mortgage Loan.



Student Loans: Calculation of Monthly Obligation Regardless of the payment status(including Deferred), the Mortgagee must use either the greater of:

  • 1 percent of the outstanding balance on the loan; or
  • the monthly payment reported on the Borrower’s credit report; or

The actual documented payment, provided the payment will fully amortize the loan over its term.


For all student loans, regardless of the payment status (including Deferred), the lender must include a monthly payment in the borrower’s recurring monthly debt obligation when qualifying the borrower.

  • 1% of the outstanding balance; or
  • The Actual Payment that will fully amortize the loan(s) as documented in the credit report, by the student loan lender, or in documentation supplied by the borrower;

Exception: if the actual documented payment is <1% of the outstanding balance, and it will fully amortize the loan with no payment adjustments, the lender may use the lower, fully amortizing monthly payment to qualify the borrower.


  • If student loan repayments are scheduled to begin within 12 months of the date of VA loan closing, lenders should consider the anticipated monthly obligation in the loan analysis.
  • If the borrower is able to provide evidence that the debt may be deferred for a period outside that timeframe, the debt does not need to be considered in the analysis.

Policy for Income Based Repayment Plans (Student Loans)

  • Lender may use the Income Based Repayment (IBR) payment if it is verified (including $0.00) when the payment is fixed for a minimum of 12 months post-closing date
  • When fixed for less than 12 months post-closing the lender must use the regularly calculated payment that will be due once the IBR ends
  • When no payment is reported or available, the lender must use a payment calculation using 5% of the current report balance as the monthly payment



STUDENT LOANS Student loans. Lenders must include the greater of one percent (1%) of the outstanding loan balance or the verified fixed payment as reflected on the credit report.

Income Based Repayment (IBR) plans, graduated plans, adjustable rates, interest only and deferred plans are examples of repayment plans that are subject to change. These types of repayment plans are unacceptable to represent a long term fixed payment plan.






 502-905-3708 text or call with your mortgage questions.

Joel Lobb (NMLS#57916)
Senior  Loan Officer
American Mortgage Solutions, Inc.
10602 Timberwood Circle Suite 3
Louisville, KY 40223
Company ID #1364 | MB73346

The view and opinions stated on this website belong solely to the authors, and are intended for informational purposes only.  The posted information does not guarantee approval, nor does it comprise full underwriting guidelines.  This does not represent being part of a government agency. The views expressed on this post are mine and do not necessarily reflect the view of  my employer. Not all products or services mentioned on this site may fit all people.
, NMLS ID# 57916, ( I lend in the following states: Kentucky

3 thoughts on “How Does Student Loans Affect A Mortgage Loan Approval in Kentucky ?

  1. , First-time buyer, home loan, Kentucky, Kentucky Housing Corporation, Kentucky-Louisville, KHC’s (Kentucky Housing ) First Mortgage Government, Louisville Kentucky First Time Home Buyer, Mortgage loan, STUDENT LOANS, USDA, VA loan, Zero down home loans

  2. Pingback: How Does Student Loans Affect A Mortgage Loan Approval in Kentucky ? – Louisville Kentucky Mortgage Loans

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