Conventional Mortgage: Student loan and DTI questions

[jenrn123]

I have a couple of questions about the impact of my student loans. Because I am in graduate school with an expected graduation date of May 2020 my student loans are currently deferred. I will be adding another $4500 next semester placing my total student debt at just under $32000. None of my loans have a payment listed, although I am paying enough to prevent accumulating interest and to make a very small dent in the principle. I have a couple of questions regarding how they apply to conventional mortgages.

1. With my student loans being deferred for 15-18 months beyond my loan origination date, how will the mortgage issuer calculate them into my DTI? There is currently no payment associated with my student loans so is it $0 or would it be estimated at 1% as in other loans that I've read about in the forums?

2. My final student loan amount (the $4500 mentioned above) will be added to my credit profile in January. How will this impact my mortgage scores if I will be pursuing a mortgage in May?

I also am somewhat confused when it comes to figuring usual DTI % allowed on a conventional loan. Is this something that most lenders will discuss with you up front prior to completing applications? I'm concerned that my local banker is going to be more conservative due to being very small and that I won't be able to get my DTI low enough to qualify, especially if my student loans are calculated in. Would I be better off pursuing a loan with Navy Federal or Pen Fed CU or utilize the services of a mortgage broker? Does the fact that I am financing less than 1/2 the value of the house impact the qualifying DTI percentage ($150000 mortgage on $400000 home)?

I appreciate any assistance that you all can give me!

[kc0039]

DTI and LTV are two different things. No matter what the LTV, if your DTI is above the threshold, you won't qualify for the loan. Since your student loans are deferred, most programs will use 1% of balance unless you put yourself in an income based repayment plan.

[Anonymous]

With the loans currently in a deferred status, your lender would have to use 1% of the balance if underwriting per Fannie Mae. If your lender follows Freddie Mac guidelines, then he/she could use a half percent instead. This can sometimes be the difference in qualifying.

As for the DTI, it will depend on your credit profile and overall strength of the application, but many lender can allow up to a 49.9999% DTI now as long as the automated underwriting system runs approve eligible.

Thank you,