Deferred student loans and pre-approval

[Anonymous]

Hello! I've not posted here before but I am hoping I can get a little insight into our situation. My husband and I are trying to buy our first home soon. He is finishing up the last semester of his masters degree and will graduate this May. We are trying to get pre-approved for a FHA loan and his student loan payments have to be considered in the DTI ratio. He will be consolidating his loans to get a lower payments, and the gov't website through which he will be consolidating (loanconsolidation.ed.gov) estimates his payments at $530 a month, which puts us under the DTI ratio for the FHA loan.

The problem is that the lender I am talking to will pre-qualify us for the amount of house we want to buy, but can't pre-approve us because they cannot accept that estimate as proper documentation, and we would like be pre approved before we make an offer. The lender says we have two options: to consolidate or to call each individual loan servicer and get an estimated payment. 

The problem with consolidating is it takes 2-3 months and we are ready to buy now. It also means that as soon as those 2-3 months are over we will start paying on the loans instead of starting to pay them in May. Not the end of the world, we can afford the payments, but not ideal I suppose.

I tried calling each lender and our estimated unconsolidated payments ended up being about $1000 total a month, which puts us over the DTI ratio.

So what I am wondering is, are these our only two options? Is it possible that a different lender might accept the estimated payment of $530? I was thinking we could just go for a conventional loan, but I am not sure how approval works for that and we would only like to put down 5% in that situation, and I am not sure how much of a down payment conventional loans require. I am waiting on a call back from my current lender but thought I would also ask here. Any advice would be much appreciated! Thanks.

[webhopper]

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@Anonymous wrote:

Hello! I've not posted here before but I am hoping I can get a little insight into our situation. My husband and I are trying to buy our first home soon. He is finishing up the last semester of his masters degree and will graduate this May. We are trying to get pre-approved for a FHA loan and his student loan payments have to be considered in the DTI ratio. He will be consolidating his loans to get a lower payments, and the gov't website through which he will be consolidating (loanconsolidation.ed.gov) estimates his payments at $530 a month, which puts us under the DTI ratio for the FHA loan.

The problem is that the lender I am talking to will pre-qualify us for the amount of house we want to buy, but can't pre-approve us because they cannot accept that estimate as proper documentation, and we would like be pre approved before we make an offer. The lender says we have two options: to consolidate or to call each individual loan servicer and get an estimated payment. 

The problem with consolidating is it takes 2-3 months and we are ready to buy now. It also means that as soon as those 2-3 months are over we will start paying on the loans instead of starting to pay them in May. Not the end of the world, we can afford the payments, but not ideal I suppose.

I tried calling each lender and our estimated unconsolidated payments ended up being about $1000 total a month, which puts us over the DTI ratio.

So what I am wondering is, are these our only two options? Is it possible that a different lender might accept the estimated payment of $530? I was thinking we could just go for a conventional loan, but I am not sure how approval works for that and we would only like to put down 5% in that situation, and I am not sure how much of a down payment conventional loans require. I am waiting on a call back from my current lender but thought I would also ask here. Any advice would be much appreciated! Thanks.

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Look into USDA,  see if they factor deferred loans into DTI.

My advice... be patient.  Start the consolidation now. Try to get your current lease extended for a short time period.

Does he have a job offer that will increase his income after grad school?

[Anonymous]

He has a good job now, they pay him a bit above the industry average so he will most likely stay with his current company. He will recieve an inflation raise and a raise when he graduates with his masters, but we are not sure how much that will total to.

We are in a month to month lease and our landlord is very flexible so it's not like we have to move now, you are probably right in that we should be patient! We are just antsy to buy and the market is so good now, but if we end up consolidating hopefully it won't take too long.

[jessica04]

Actually, I'm going USDA guaranteed now and my deferred student loans had to be considered into dti. Also, since mine were in deferrment I didn't know the payment amount either but my loan officer verified it for me and the credit bureau updated it.