Lenders have been having difficulties lately getting 620 credit score single borrowers approved for CONVENTIONAL loans... It's automated system has been a lot more strict lately especially when there is 1 borrower on the loan instead of 2... FHA has shown its much easier to get approved because FHA will allow manual underwriting. So if the automated system says no (refer/caution) FHA will allow for manual underwriting where Conventional loans they will not. Most lenders are pretty strict with manual underwriting. But there are 1 or 2 lenders out there who will approve many FHA loans via manual underwrite that no other lenders would touch - even after they've been turned down by multiple other lenders. (50% debt ratio allowable on manual underwriting)
FHA shows they require 1% of the student loan balances (loan amount) to be calculated toward debt ratio. In your case of 135K student loan debt, FHA would traditionally use $1,350 as your monthly student loan obligation. This calculation hurts many borrowers debt ratio... There happen to be ways around this that some lenders will allow. The student laon company would normally need to provide a document that states "fully amortized" student loan payment... In which case, many times lenders do not like how it is worded because the student loan company refuses to add key words in their documentation such as "fully amortize." This causes issues with most lenders.. There happens to be an easy solution to this but I only know of a couple lenders that would accept. They would accept a verbal from the student loan company. Because these student loan companies can say thins verbally that they cannot put in writing. Therefore, when a representative calls into the student loan company and they state that IF your $135k student loan debt was amortized on a 20 year term at 5% interest, your payment would be $790 per month, the lender would then use $790 per month monthly obligation instead of $1,350. This is HUGE and many times the difference maker. This can also play a roll in a buyer getting pre-approved for a much more expensive house. In your case, by reducing your student loan payment from $1,350 to $790 (a difference of $560 per month) that equates to an extra $100,000 more buying power.
Its been a long day, I hope what I wrote is at least somewhat coherent
