FHA changing student loan payment calculations (effective after 6/30/16)

[Anonymous]

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@mrsjr wrote:

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@Anonymous wrote:

So what if I am a public servant, in the 10 year forgiveness plan (about 2 years in) on the IBR payment plan.  After 10 years they get forgiven, does that factor into this at all?  I owe 70k and pay 240 a month, would they use my 240 a month or would they do 1 percent which would be like 700 a month?!?!  That would bring my DTI to like 70 percent.  

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From what I understand, it doesn't matter about future forgiveness.  They will still use the 1% rule.  If I'm wrong, someone please feel free to correct me.

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This is correct.

[Anonymous]

One more question... does the following mean that I can amortize the loan over any length of time. For instance instead of a 10 year loan can I do a 20 year loan and use that payment amount for mortgage qualification? I wouldn't be doing an IBR so would it work using a longer repayment term?

Or:

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

[Anonymous]

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@Anonymous wrote:

One more question... does the following mean that I can amortize the loan over any length of time. For instance instead of a 10 year loan can I do a 20 year loan and use that payment amount for mortgage qualification? I wouldn't be doing an IBR so would it work using a longer repayment term?

Or:

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

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Technically, yes.

[Anonymous]

So... just got off the phone with a mortgage broker. He said that if I was under contract and applied for the FHA by June 30th that he could still use an IBR amount for my dti ratio. Does this sound correct?

I still have to find a house & call fed loan servicing to document the ibr payment. So time is short but....it is a ray of hope...maybe? Or am I getting my hopes up for nothing?

[vikingred]

I found this out hard way.  Have substantial six figure student loans in "in-school" deferment status.  It's actually cheaper to take online courses at community college half-time than it is to pay the cheapest IBR payment.  Just paid home off recently and got under contract on another home.  Sorry, no FHA for you.  But there are certain lenders who will do conventional and not include student loans in IDR as long as they are in "in-school" deferment status.  Thanks OBAMA.

[Anonymous]

Ok so I'm in a similar situation to all and graduating this summer with six figures from a private school MBA double masters. I work in non profit and didn't care about taking more expensive tuition out since I am doing public service forgiveness. Now my hopes of purchasing are crumby. I have a local Fha lender friend who called HUD and gave her the runaround on if they will accept extended fixed plans or graduated plans. The wording is vague because one way you look at it, graduated is not fixed because each year is different, but they are fixed as in they are set payment amounts that fully amortize. The extended seems like it should work no matter what though as those are fixed and fully pay off loan after 25 years. She couldn't give me a confirmation on that and said it may be up to the underwriter at the time I apply. I think this whole mess is insanely unjust specifically to those of us on IBR who are in nonprofit. I chose a nonprofit position even though it pays less and now I am getting burned by the law change. My payment is going to be $250 a month with my kids and IBR yet a loan officer will take 1% which is $1700!?! I will never get qualified and it's simply not right. If my IBR goes up its because my salary goes up which means I can still pay my mortgage a ok! If anyone finds out about the extended fixed or graduated payments that all fully amortize as opposed to a high standard ten year please let me know

[ArmyWifeMBA]

These articles are saying the IBR Payments on the credit report is what is used. The 1% rule is for those who are in deferment.

I hope these articles are right in their interruption of this new rule, otherwise it just doesn't make sense.  Those who are public servants, we are told to use the IBR calculation for loan forgiveness if we have high balances. 

http://www.findmywayhome.com/home-mortgage-news/qualifying/qualifying-mortgage-income-based-repaymen...

http://teammovemortgage.com/2016/02/21/income-based-repayment-and-purchasing-a-home-with-fha/

ArmyWifeMBA

[ShanetheMortgageMan]

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@ArmyWifeMBA wrote:

These articles are saying the IBR Payments on the credit report is what is used. The 1% rule is for those who are in deferment.

I hope these articles are right in their interruption of this new rule, otherwise it just doesn't make sense.  Those who are public servants, we are told to use the IBR calculation for loan forgiveness if we have high balances. 

http://www.findmywayhome.com/home-mortgage-news/qualifying/qualifying-mortgage-income-based-repaymen...

http://teammovemortgage.com/2016/02/21/income-based-repayment-and-purchasing-a-home-with-fha/

ArmyWifeMBA

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Articles are also published before the new guidelines were even announced.

[mgs2010]

This is terrible. More recent grads will be forced to buy less house or pushed out of the market completely.

[Anonymous]

I just went through this with my lender. I owe 100k and had an IBR payment showing on my credit report. I printed the letter on myfedloans (as some mentioned above) and was denied usda as they told me they have to calculate 1%. I asked if we could do a conference call to myfedloan to get a verbal on what my lowest fixed amount would be (myfedloan would not send me a letter). My lender said no because that's not what I'm actually paying. I am also eligible for the 10 yr forgiveness but their response was no because employment could change before the ten years. Luckily, my back end dti ended up just under 49%, and my lender accepts up to 50% for fha. Defenitly hurts the wallet switching from usda but at least I was able to get a commitment. The crazy thing is, if your student loans bog you down and make it harder to save for a down payment/closing, they disqualify you from a no down payment option to one that requires you to use all of your liquid asserts (which puts a greater chance of defaulting on a loan). Seems like a backwards system