topic Re: DTI with student loans in Mortgage Loans

DTI with student loans

Anonymous — Thu, 25 May 2017 22:26:23 GMT

I owe $32k in student loans to Navient. My loans are in an income based repayment plan and have been for almost a year. I have to reapply for this payment plan for another year in July. I just spoke with Navient and they told me with my income and having a two year old that my payments would continue to be $0.00 as I am still under $24k a year with my job. My adult daughter also makes $24k a year and is going in with me to buy a home since she lives at home anyway and I need her income. The one mortgage lady I spoke with about six months ago said that they would have to count my payments as 1% of my loans or $320 a month which is a huge part of my monthly income. I don't really understand this if my payments are $0.00. However, the lady at Navient told me that if I don't include my daughter on my application for the income based repayment that I would have payments of $66 a month. So my question if my payments were $66 rather than $0 would that help or will they still insist on counting my payment as 1% or $320 a month. I am so confused.

Re: DTI with student loans

Anonymous — Thu, 25 May 2017 22:31:22 GMT

Also, I asked about amortization and she said Navient doesn't offer that if that means anything. I only asked about that because I had seen it online in different forums and was curious about it. She basically said if I wasn't doing the income based repayment that I would have 120 payments and that amount was pretty much the $320 a month.

Re: DTI with student loans

VALoanMaster — Fri, 26 May 2017 13:57:30 GMT

@Anonymous wrote:
I owe $32k in student loans to Navient. My loans are in an income based repayment plan and have been for almost a year. I have to reapply for this payment plan for another year in July. I just spoke with Navient and they told me with my income and having a two year old that my payments would continue to be $0.00 as I am still under $24k a year with my job. My adult daughter also makes $24k a year and is going in with me to buy a home since she lives at home anyway and I need her income. The one mortgage lady I spoke with about six months ago said that they would have to count my payments as 1% of my loans or $320 a month which is a huge part of my monthly income. I don't really understand this if my payments are $0.00. However, the lady at Navient told me that if I don't include my daughter on my application for the income based repayment that I would have payments of $66 a month. So my question if my payments were $66 rather than $0 would that help or will they still insist on counting my payment as 1% or $320 a month. I am so confused.

You will have to count 1% if you're going FHA, If you can qualify for a conventional loan we can use the payment reported on your credit.

Re: DTI with student loans

dragontears — Sat, 27 May 2017 02:59:37 GMT

The person you spoke to at Navient doesn't know what amortization means, having a fixed payment for a fixed time frame is a amortized loan.

Re: DTI with student loans

Anonymous — Sat, 27 May 2017 05:03:07 GMT

We are actually hoping to get a place in the country so hopefully we can get a USDA or rural development loan. Would it still be the 1% for that type of loan?

Re: DTI with student loans

Anonymous — Tue, 21 Nov 2017 15:18:37 GMT

This is from the USDA Guaranteed Loan 3555-1 handbook:

Student loans: Lenders must include the payment as follows:

Fixed payment loans: A permanent amortized, fixed payment may be used in the debt ratio when the lender retains documentation to verify the payment is fixed, the interest rate is fixed, and the repayment term is fixed.

Non-Fixed payment loans: Payments for deferred loans, Income Based Repayment (IBR), Graduated, Adjustable, and other types of repayment agreements which are not fixed cannot be used in the total debt ratio calculation. One percent of the loan balance reflected on the credit report must be used as the monthly payment. No additional documentation is required.

I assume it's the same for the Direct loan, but I will look into it and let you know.

This is maddening to me. Anyone who qualifies for a low-income mortgage loan that also has student loan debt is most likely on an IBR plan. My IBR payment is somewhere in the vicinity of $18 a month, yet it's going to be factored as though it's $390 - which makes it all but impossible for me to get my DTI where it needs to be without selling my car (not an option in the suburbs) or purchasing a house in an actual slum. Joy.

Re: DTI with student loans

Anonymous — Wed, 22 Nov 2017 00:11:15 GMT

I have heard others mention switching to an extended repayment plan temporarily until the mortgage is closed and then switching back. You can switch your payment plan at anytime and this gets you around the 1% if there is a big difference.

Re: DTI with student loans

Anonymous — Thu, 02 Aug 2018 20:58:10 GMT

Did anyone ever find out if the 1% rule applies to the USDA Direct Loan as well?