Reading conflicting info re: FHA and IBR

[Anonymous]

We are currently in underwriting and like most people, I keep thinking about all the ways things will go wrong.  I'm a nervous wreck.  So to set my mind at ease, I have been doing a lot of reading up on our "negatives" and am finding conflicing information about one particular issue.  I have student loans that are in income based repayment (IBR) until the end of the year when I will reapply and most likely get a higher payment because our income increased.  My payment now is only about $50 and that is what shows on my credit report.  It does not show how many months are remaining (at least not anywhere I can see it).  I recalculated based on our increased income and my payment will most likely be around $120 in January.  We have a fairly low DTI so I'm not concerned about making the mortgage payment at all.  However, I have read that if there is less than 12 months remaining on the current payment amount (which there is), then a lender will use 1% of your total balance (which is almost $70,000 so my payment would be $700). Is this standard for all/most lenders or do some go solely by the payment amount shown on the credit report?  How does a lender even know if the payments are income based or standard?  

[Anne1208]

I went to a lender on Friday to run some hypotheticals for when we buy in a year or so.  I have $170,000 in student loans, im on IBR, and my payments are $400/mo.  She said this:

Student loans: For all student loans whether deferred, in forbearance or in repayment, if no payment is reflected on the credit report, satisfactory documentation must be provided to evidence and support the payment used.DU Loans: The greater of the following must be used to determine the monthly payment used for qualifying purposes.

◾1% of the outstanding balance; or

◾The actual documented payment

So, if no payment is reflected on my credit report, they consider my loans at $1,700/mo.

I didn't inquire further because luckily we're wanting to buy for far below what we'd qualify for with my "Actual" $400/mo payment, so inputting the $1700/mo didnt jeopardize what we'd want.  BUT I don't even think it's an issue, because mine simply shows as $400 on my credit report.

I think the issue comes up 1. when the actual IBR payment you're paying isn't reflected on your report (like if mine just shows $170,000 but the monthly payment line was blank), or 2. when someone is in IBR and their income is so low relative to their debt that their current IBR payment is $0. You obviously have a high enough income that you actually have a payment, and it's reflected on your credit report as a monthly payment.

I don't know for sure, but it sounds like you're in as good of circumstances under IBR that one can be, so all you can do now is wait and see - sorry I can't tell you for certain! Worst case is it shows up as a $700/mo payment, which hopefully doesnt mess with your DTI. Good luck!

[Anonymous]

Well that would be great.  Sets my mind at ease a little more.  Thanks  

[Anonymous]

My credit reports show my actual payment but my lender still went by the 1% rule. In my case it was only a difference of $100 but I just wanted to note that it may be possible that different lenders follow different lender overlays regardless of FHA guidelines. Can you ask your lender? I did because I also worried about this exact same thing.

[aymst1]

I was told I didn't qualify for a conventional and to reapply FHA because they used  1% not my actualy payments. Which is completely innaccurate because my payments would never be that high. Ever. 

[Anonymous]

Conventional will use the greater of 1% or the actual payment and FHA will use the actual payment on the credit report.

The only time you may run into a problem is if the IBR payment shows $0 on the credit report.