How do Student Loans Affect Your Chances of getting approved for a Kentucky Mortgage Loan?

 conventional loan guidelines student loans


Kentucky Student loans can affect your ability to qualify for a Kentucky mortgage loan. In the chart below, we will point out the main qualifying guideline differences for each loan program that most people choose for their new home loan.

  1. Kentucky Fannie Mae and Freddie Mac Conventional loans: This is by far the easiest loan program on student loans. However, they do require a 620 minimum credit score to be considered for this loan program. They will take the payment listed on the credit report if even the payment is less than 1% of the outstanding student loan balances.

2. Kentucky FHA Loans: This is one of the most difficult programs to qualify for if                  have a large amount of student loan balances. FHA will use 1% of the outstanding               balance which can make it difficult to qualify if you have a lower income  and                    high  student loan balances. The good thing about FHA loans is that they will do                 down to  a much lower credit score than Fannie Mae on the credit score                                 requirements, so keep this in mind. FHA will go down to a 580 credit score if you                 have 3.5 percent  down payment and will allow for gifts for down payments.

3. Kentucky VA loans: VA can be easier to qualify for if you are a veteran or active¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† duty soldier that has a VA COE. VA states that if the student loan debt is deferred¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† for¬† 12 months from the first new house payment, then the student loan payment¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬†does¬† not have to be calculated into the borrower’s debt to income ratio, thus¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬†making it much easier to qualify for a mortgage payment if you have a lot¬† of¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† student loan debt.

If the student loans are currently in repayment, then you can use the actual repayment plan, or use 5% of the total outstanding balances, divide by 12 months. They will not allow for an IBR (income based repayment)  payment, so keep this in mind.

Kentucky USDA Mortgage Loans: USDA will not allow for an IBR repayment plan payment when qualifying for a mortgage loan. They will take 1% of the outstanding loan balance or the fully amortized payment payment whichever is higher, to figure the qualifying house payment on USDA Mortgage loans debt to income ratio requirements.

9c8f7-gotquestion2B252812529

image.png
Student Loan Chart to Use for Kentucky FHA, VA, USDA and Fannie Mae Mortgage Loans Qualifying Guidelines when figuring payments to use for debt to income ratio approval limits
if you have questions about qualifying as first time home buyer in Kentucky, please call, text, email or fill out free prequalification below for your next mortgage loan pre-approval.
Text or call phone: (502) 905-3708
email me at kentuckyloan@gmail.com

What are the current student loan guidelines for a Kentucky FHA, VA, USDA and Fannie Mae Conventional Mortgage loan.


 

aaaf9a21b3b923d060abfeabaaf30469

Kentucky FHA Loan Guidelines for Student Loans:

Must be included in the borrower’s liabilities regardless of the payment type or

status. The payment amount must be either:

‚Ė™ The greater of:

· 1% of the outstanding balance on the loan or

· Monthly payment reported on the borrower’s credit report, or

‚Ė™ The servicer‚Äôs documented payment provided the payment will fully amortize

the loan over the repayment term period

 

Kentucky VA Mortgage Guidelines for Student Loans:

Deferred

A payment does not need to be included if written evidence supports that the

student loan debt will be deferred beyond 12 months of closing.

In Repayment

Include loans with payments starting within 12 months. Calculate threshold

payment as a rate of 5% of outstanding balance divided by 12 months. If credit

report payment is higher, use credit report payment. If current documentation

from student loan servicer reflects actual terms and payment for each loan,

the verified payments may be used even if less than the threshold payment

calculation.

Kentucky USDA Mortgage Guidelines For Student Loans

Fixed Payment

A permanent amortized, fixed payment is used when documentation supports fixed payment, interest and term.

Non-Fixed payment

Use 1% of the loan balance reflected on the credit report. Payment arrangements

that are deferred or non-fixed (Income Based Repayment (IBR), graduated, adjustable, interest only, etc.) may not be used.

Fannie

Loans in Repayment Period

‚Ė™ If provided, use the credit report payment

‚Ė™ If credit report is incorrect, obtain student loan documentation from the servicer

to verify the payment used for qualification

Income Driven Repayment Plan

Use the student loan documentation to verify the actual monthly payment. Borrower

may be qualified with a $0 payment if the documentation supports it.

Loans in Deferment or Forbearance

‚Ė™ A payment equal to 1% of the outstanding student loan balance (even if this

amount is lower than the actual fully amortizing payment) or

‚Ė™ A fully amortizing payment using the documented loan repayment terms

Freddie

Loans in Repayment

Use the greater of payment reported on credit report or .5% of the higher of original

or outstanding loan balance as shown on credit report.

Loans in Deferment or Forbearance

Use greater of payment reported on credit report or 1% of the higher of original or

current outstanding loan balance as shown on the credit report.

Loan Forgiveness

Payment may be excluded if file contains documentation that indicates:

‚Ė™ Monthly payment is deferred and/or in forbearance and full balance of the loan will be forgiven, canceled, discharged or will be paid if qualified for an employment-contingent repayment program and

‚Ė™ Borrower currently meets requirements for the student loan forgiveness/cancelation program

Obtain documentation from the student loan servicer to show the loan will be forgiven, canceled, discharged or that the borrower qualifies and is approved under an employment contingent repayment program that will extinguish the debt.

http://www.emailmeform.com/builder/form/0bfJs9b6bK8TGoc6mQk9hIu
 
Joel Lobb (NMLS#57916)
Senior  Loan Officer
 
American Mortgage Solutions, Inc.
10602 Timberwood Circle Suite 3
Louisville, KY 40223
Company ID #1364 | MB73346
 


Text/call 502-905-3708
kentuckyloan@gmail.com

Disclaimer: No statement on this site is a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant’s eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over the life of a loan. Reduction in payments may reflect a longer loan term. Terms of any loan may be subject to payment of points and fees by the applicant  Equal Opportunity Lender. NMLS#57916 http://www.nmlsconsumeraccess.org/
 
‚ÄĒ¬†Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice. The content in this marketing advertisement has not been approved, reviewed, sponsored or endorsed by any department or government agency. Rates are subject to change and are subject to borrower(s) qualification.

 

Fannie Mae Mortgage Student Loan Solutions Frequently Asked Questions


aaaf9a21b3b923d060abfeabaaf30469

 

Fannie Mae Student Loan Solutions Frequently Asked Questions
Listed below are common questions about Fannie Mae’s Student Loan Solutions.

Dos-and-Dont.jpg
Q1. How does Fannie Mae anticipate Student Loan Solutions will benefit
borrowers?
Forty-four million Americans today have student loan debt; seven in 10 graduates
of public and nonprofit colleges in 2015 had student loan debt; and recent
graduates averaged $34,000 in student loan debt.*
The Student Loan Solutions referenced in the Announcement address
challenges and obstacles to homeownership due to a significant increase in
student loan debt over the past decade and provide access to credit for qualified
borrowers. The new solutions give homeowners the opportunity to pay off one or
more student loans with a lower cost mortgage refinance, allow borrowers to
exclude certain monthly obligations paid by others from debt-to-income (DTI)
ratio, and make it more likely for borrowers with student debt to qualify for a
mortgage loan by allowing lenders to accept student debt payments included on
credit reports.
Student Loan Cash-Out Refinance
Q2. Why did Fannie Mae decide to offer the Student Loan Cash-Out Refinance
option and how did they get comfortable from a risk perspective?
The Student Loan Cash-Out Refinance offers simpler eligibility terms and
reduced fees designed to provide additional options for borrowers with student
debt.
Q3. Can part of a student loan debt be paid off with the refinance?
No, borrowers may not partially pay down a student loan. Student loan(s) must
be paid in full with the transaction. No other debts can be paid except PACE
(Property Assessed Clean Energy) loans.

Q4. Are high-balance loans eligible?
Yes.
Q5. Are there any technical considerations for lenders and technology service
providers?
Yes

Q6. Why did Fannie Mae make this policy change to exclude debt paid by
others and how did they get comfortable from a risk perspective?
The policy change provides greater access to credit for creditworthy
borrowers who meet all other requirements. It also supports Fannie Mae’s
broader efforts to mitigate the widespread challenges of student debt.
From a risk perspective, we are still requiring 12 months of documentation
to verify that a party (other than the borrower) has been paying the
monthly payments

.
Q7. What evidence needs to be provided?
Lenders must obtain the most recent 12 months’ cancelled checks (or
bank statements evidencing 12 months payments) from the party paying
the debt. Additionally, lenders must ascertain that there is not a history of
delinquent payments for that debt.
Q8. If someone else pays only a portion of the non-mortgage debt, is all of the
non-mortgage debt excluded in the DTI ratio, or is it only the portion that is
paid by the third party?
In order for the debt to be excluded from the DTI ratio, the other party has
to pay the complete monthly obligation every month for a minimum of 12
months.
Q9. What about mortgage debt?
Fannie Mae’s policy regarding mortgage debt has not changed. Fannie
Mae will continue permitting exclusion of the mortgage monthly payment
from a borrower’s DTI ratio when the lender can provide a 12-month
history of satisfactory payment by another party, but only if the other party
is obligated on the mortgage debt.

Q10. Why is Fannie Mae making this student loan payment calculation change
and how did they get comfortable from a risk perspective?
Fannie Mae recognizes the operational complexity of their previous policy
and this change simplifies the process for lenders. For student loans
associated with an income-driven repayment (IDR) plan, the student loan
payment, as listed on the credit report, is the actual payment the borrower
is making and that payment should be used in qualifying. Any future
increases in the IDR payment will be tied to similar increases in the
student’s income, mitigating concerns that IDR payments may create
payment shock.
Q11. Some IDR plans allow a borrower’s payment to go to $0. In that case, how
is the student loan payment calculated?
As long as the lender can provide documentation showing the IDR payment is
$0, they can qualify the borrower with $0 for the monthly qualifying payment.
Q12. What if the credit report does not reflect the correct student loan monthly
payment and there is documentation in the file to support a different
monthly payment?
If a lender has student loan documentation in the file (i.e., most recent
student loan statement), evidencing a different monthly payment than the
credit report, the lender may use that alternative documentation to support
the correct monthly payment amount. Alternatively, lenders may obtain a
credit report supplement or update the credit report to reflect the correct
monthly payment amount.
Q13. Will Fannie Mae continue allowing lenders to manually calculate an
estimated student loan payment in cases where the repayment terms are
unknown?
Yes. If the repayment terms are unknown and lenders choose not to
estimate a 1% (of unpaid principal balance) payment, lenders may calculate
a payment that will fully amortize the loan(s) based on the current prevailing
student loan interest rate and the allowable repayment period shown in the
table below.
The ‚Äúcurrent prevailing student loan interest rate‚ÄĚ can be found on a variety
of websites. For example, see U.S. Department of Education Federal
Student Aid in E-1-03, List of Contacts (01/31/2017). The table below
specifies the repayment period to be used when calculating a fully amortizing
payment.

Calculating a Student Loan Repayment
Total Outstanding Balance Of All Student Loans Payment period payback
Example: Calculating an
Amortizing Payment
$1 – $7,499 10 years
Balance: $17,500
$7,500 – $9,999 12 years
Repayment Period: 15 years
$10,000 – $19,999 15 years
Interest Rate: 4.29%
$20,000 – $39,999 20 years
Monthly Amortizing Payment:
$132.00
$40,000 – $59,999 25 years
$60,000 + 30 years
Note: The lender is responsible for determining that the payment on the credit report or
other documents provided by the student loan lender or borrower are fully amortizing
payments

if you have questions about qualifying as first time home buyer in Kentucky, please call, text, email or fill out free prequalification below for your next mortgage loan pre-approval.
nmls-ca-button-e1415992123657-1

Fill out my form!

.

Guidelines Changes on Student Loans for Conventional Fannie Mae, USDA, FHA, and VA Mortgage loans in Kentucky


aaaf9a21b3b923d060abfeabaaf30469
Agreed, Student loans kill more mortgage loans now more than any other borrower that has good credit than anything else. The mortgage giants, ie, (Fannie Mae, Freddie Mac, USDA, FHA, VA, RHS) use to be very friendly toward student loans and if they were deferred or in forbearance we counted no payment for it.
Now with the massive explosion in student loan debts since the recession of 2008, student loan debt has now passed a lot of forms of debts and it’s growing every day since the cut backs from state and local governments and the increase of education costs being shifted toward the school and borrower.
Student loan debts by 2020 will be the biggest debt out there, surpassing mortgage debt.
They have reigned the requirement to make it more difficult to borrow now due to the increasing debts and fear of the borrower walking away from the house. You cannot walk way from student loan debts but you can a home, so tht is there thinking I am told by the higher-ups.

Recent changes to Fannie Mae and Freddie Mac guidelines have made it easier for some, but not all with student loan debt to still qualify for home mortgage loans.

Both Fannie and Freddie have set underwriting guidelines that if lenders follow, makes the selling of loans to Fannie Mae and Freddie Mac much easier.

Student Loans. How do lenders calculate?

Student loans can be in active repayment, some sort of reduced repayment (which is typically an income based repayment), or completely deferred.  While a student loan may be deferred for the next year or two, your mortgage loan is typically a 30-year loan. It only makes sense that lenders take current or future student loan payments into consideration when calculating debt ratios and affordability.
To avoid confusion, I’ll just talk about current guidelines for how lenders currently deal with your student loan debt for debt-to-income ratio purposes.

FHA Loans:

FHA loans must use the greater of 1% of the outstanding balance, or the payment listed on the credit report, unless you can document the payment is a fully amortizing payment. No income based repayment, graduated payments, or interest only payments allow

Fannie Mae Loans:

For deferred loans, must use 1% of the outstanding balance. For loans currently in repayment, use the payment listed on the credit report. If payment is listed as $0.00, but $0.00 is an active income based repayment, we must verify with the student loan company that $0.00 is the income based repayment.

Freddie Mac Loans:

For loans in repayment, use the amount listed on the credit report, or at least .50% (1/2%) of the outstanding balance, whichever is greater.
For deferred loans, must use the amount listed on the credit report, or 1% of the outstanding balance as reported on the credit report
.

USDA Rural Housing Loans:

For USDA loans, if the loan is deferred, income based payment, graduated payment, or interest only payment, must use the greater of   .5% of the outstanding balance, or the amount listed on the credit report.

VA Home Loans:

For VA loans, if payment is deferred at least 12 months past the loan closing date, no payment need be listed.
If payment will begin within 12 months of closing, use the payment calculated based on:
  a) 5% of the outstanding balance divided by 12
  b) The payment listed on the credit report if the payment is higher than calculated under (a).
  or
If payment on credit report is less than (a), a letter, dated within the last 60-days directly from the student loan company that reflects the actual loan terms and payment information is required to use the smaller payment.
These updated guidelines primarily help those currently in repayment, but with income based, graduated payment, and interest only payment student loans obtain conventional loans
Student Loans Guidelines for FHA, VA, USDA and FAnnie Mae
The FNMA student loan calculation has been amended to the following
  • If the credit report lists a payment amount, then the listed amount can be used for qualifying purposes
  • If the credit reports lists a $0 payment or no payment at all, either of the following calculations can be used
    • o¬†¬† 1% of the outstanding student loan balance; OR
    • o¬†¬† A calculated payment that will fully amortize the loan based on the loan repayment terms
 
Note: This applies to deferred student loans as well, no matter the length of deferment.
text or call my phone: (502) 905-3708
email me at kentuckyloan@gmail.com
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, (www.nmlsconsumeraccess.org). Mortgage loans only offered in Kentucky.
All loans and lines are subject to credit approval, verification, and collateral evaluation and are originated by lender. Products and interest rates are subject to change without notice. Manufactured and mobile homes are not eligible as collateral.

 

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.

aaaf9a21b3b923d060abfeabaaf30469

KENTUCKY FHA MORTGAGE LOAN RULES FOR STUDENT LOANS:

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.

KENTUCKY FANNIE MAE OR CONVENTIONAL LOAN GUIDELINES FOR STUDENT LOANS

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.

KENTUCKY VA MORTGAGE LOANS FOR STUDENT LOANS 

  • 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

KENTUCKY USDA MORTGAGE GUIDELINES FOR STUDENT LOANS:

 

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. 

kentuckyloan@gmail.com

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, (www.nmlsconsumeraccess.org). I lend in the following states: Kentucky

KENTUCKY FHA STUDENT LOAN POLICY UPDATES


images (3)
April 18, 2016
 
KENTUCKY MORTGAGE FHA STUDENT LOAN POLICY UPDATES
On April 12, 2016, HUD announced a policy change to provide guidance on calculating student loan payments for a FHA Mortgage loan approval.  Per ML 2016-08, this policy is effective for all loans with case numbers assigned on or after June 30, 2016, however, the policy can be applied immediately to all FHA loans.
Regardless of the payment status, the Mortgagee must use:
  • The GREATER of:

o   1% of the outstanding balance on the loan; or

o   The monthly payment reported on the credit report; or

  • The actual documented payment, provided the payment will fully amortize the loan over its term
For example:
Student loan reporting on credit with a balance of $20,000.00 and a payment of $50.00.  1% of the balance is greater than the payment reporting, so you would use 1%.
If there is documentation showing a fully amortized payment of $50.00, you could use that payment instead of the 1%.
 
Joel Lobb
Senior  Loan Officer
(NMLS#57916)
 

phone: (502) 905-3708
 Fax:     (502) 327-9119
 
 

ce.