topic Re: FHA and IBR student loan payments in Mortgage Loans

FHA and IBR student loan payments

Countrygirl — Tue, 01 Mar 2022 20:35:59 GMT

Hi all,

I'm working with a mortage broker and I think they have the wrong info regarding student loans and IBR payments. Or maybe I do?

My understanding is that if the IBR payment is shown on the credit report, the IBR amount is what is factored when calculating DTI, as long as that amount is above zero. If it reports zero, then 0.5% of the loan balance is used for DTI calculations. Is that correct? This mortgage broker said that we have to use 0.5% balance for DTI, even if the credit report shows the IBR payment amount. Which is correct?

Thanks!

Re: FHA and IBR student loan payments

SouthernCredit — Tue, 01 Mar 2022 21:14:18 GMT

Lender dependent. Mine uses 1% for IBR and any loans in deferement/forebearance.

Re: FHA and IBR student loan payments

MrBEW — Wed, 02 Mar 2022 03:41:57 GMT

I was told the same thing. The IBR payment shown on CR is what is factored. I had to take mine out of deferment and start making payments for it to be factored. Was told 1% of loan if in forbearance or deferment.

Re: FHA and IBR student loan payments

Mortgage-Specialist — Wed, 02 Mar 2022 14:58:19 GMT

This 1% rule is a thing of the past that too many lenders are still holding onto. We follow FHA guidelines which state than any student loan payment above $0 will be used. Any payment that shows $0 then .5% will be used toward debt ratio.

Re: FHA and IBR student loan payments

VALoanMaster — Thu, 03 Mar 2022 19:39:15 GMT

@Countrygirl wrote:
Hi all,

I'm working with a mortage broker and I think they have the wrong info regarding student loans and IBR payments. Or maybe I do?

My understanding is that if the IBR payment is shown on the credit report, the IBR amount is what is factored when calculating DTI, as long as that amount is above zero. If it reports zero, then 0.5% of the loan balance is used for DTI calculations. Is that correct? This mortgage broker said that we have to use 0.5% balance for DTI, even if the credit report shows the IBR payment amount. Which is correct?

Thanks!

You are correct. You may want to find a new lender.

Re: FHA and IBR student loan payments

Mortgage-Specialist — Thu, 03 Mar 2022 19:56:42 GMT

Certainly