Do student loans interfere with getting a mortgage?

[Anonymous]

Hi! 

My friend just told me about this site and I am wondering- 

I am a recent grad school grad with several hundred thousand dollars of student loan debt. HOWEVER because I work in public service, my payment on these (federal) loans is calculated at 10% of my AGI (adjusted gross income, after tax) and after 10 years the balance of the loans will be forgiven by the government in honor of my service. 

So even though it says I am carrying a high debt, my actual responsiblity for payment is very manageable within my budget. 

Does anyone know how mortgage officers look at student loan debt under this type of plan?

Thanks!

[Mike_B03]

I don't think the actual type of debt matters, it just needs to be figured into your monthly debt-to-income ratio and if if qualify with that ratio, then you should be good to go from that perspective. 

[Anonymous]

OK, so what scared me was-

Do they look at the total debt amount? (If so I am in bad shape)

Or do they look at your monthly/annual payment amount? (If so not a problem for me since I only pay a percentage)

[Mike_B03]

They look at the monthly amount.

[Walt_K]

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@Anonymous wrote:

OK, so what scared me was-

Do they look at the total debt amount? (If so I am in bad shape)

Or do they look at your monthly/annual payment amount? (If so not a problem for me since I only pay a percentage)

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They look at monthly payment amount.  It sounds like you're in IBR.  I don't know how that works. On your credit report does it show the 10% amount that you pay, or does it show the full payment amount?  If it shows the full payment amount, I don't know if you can submit additional documents to show that you only pay 10% of that amount.  Perhaps someone else can address that.