Mortgage, FHA, and Student Loans

[A1Credit]

I am looking to buying a home soon and was told that student loans would not be included in the DTI if it was deferred for 12 months from the closing date.  How can you provide this information?

[BrianB_The_Loan_Professor]

You will need a letter from the lender of the loans or evidence in your loan agreement paperwork

I would call the student loan people and just ask if they can provide you with a letter

B

[A1Credit]

Okay, thanks because I was told that as long as it report deferred on the credit report than that was all that was needed but I wasn't so sure about that information.

[BrianB_The_Loan_Professor]

The credit report wont say how long it is deferred so you will need to document that part

[A1Credit]

Okay, thanks!!!

[Anonymous]

One thing to make sure, is that most deferrment letters stipulate conditions of the deferral (i.e in school, etc).  Alot of UWs will not accept a letter that has any conditions as proof of deferral.  So if it says that the loans are deferred pending graduation under the condition that xxx or yyy then that usually wil not work.  Most lenders do not provide a guaranteed letter of deferment.  This is a common thing that pops up on here.  Sometimes the UW lets it slide sometimes they do not.

[A1Credit]

I am currently in school so it is deferred until 6 months after graduation.  With this being the case the lender should be able to provide a letter stating deferrement without conditions, correct?

[Anonymous]

No, that was my point.  A deferment ALWAYS has conditions.  A deferment is a conditional release of repayment of a loan for a specific reason (economic, in shool, hardship, etc), and can therefore be revoked if circumstances change.  Right now, if you dropped out of school, after being out of full time enrollment for 6 months the loans would kick into repayment.  This is why people have a very hard time getting  student loans not counted in DTI.  Most lenders use a generic form that stipulates that the deferment is conditinal upon certain factors and most UW will not accept that as proof.  They may allow slightly higher DTI knowing the loans are not currently in deferment (especially if graduation is close).  It all depends upon the lender and the UW.  I also think in really string files the UW may be more willing to overlook this, but files more bordeline, they look at alot closer.

[A1Credit]

I see, thanks for the information.  Hopefully, the UW will be willing to overlook this since I will not be graduating for some time.

[Anonymous]

It may just depend on the UW.  I recently closed on a home.  I deferred student loans online.  I told my student loan lender I was buying a home and needed them deferred for a year.  My sister actually did the same.  My debt was only accessed according to my credit report.  I didn't provide any documentation.  It was really a non-issue.