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FHA Loan with student loans

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FHA Loan with student loans

I am newly married (October 2014) and trying to buy my first home with my husband but we have come across some issues getting preapproved.  All of our credit scores are above 640, our credit card utilization is under 30%, no late payments, we have proof of adaquete savings for a down payment and we both have have high degrees working in our respected fields.  To the blind eye this seems all fine and dandy, but we can still not get approved for an FHA loan.  Why? Because of student loans.  All of my students loans are deferred until 2017 as I am continuing my education and working, but my husbands are not.  When he was continuing his education, he applied for deferral and it was denied.  Not realizing this, three of his loans went into default ($48,000 to be exact) and he currently has an agreement with a lawyer to pay what is past due monthly.  I have researched FHA loans and the guidelines state that you can still be approved despite default or collection.  Is it that the amount in default is too high?  The two mortage lenders we have worked with could not give us a straight answer on why we were denied or what we can do to make changes.  Being that we have sufficient income and created payment plans to pay off what is in default I am at a loss of what to do.   Does anyone have any additional recommendations to help us through the preapproval process?

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Established Contributor

Re: FHA Loan with student loans

When you say there's a payment plan in place: is he rehabbing the loans? Are they still listed as defaulted on the credit report?

it is possible to get an FHA loan after the loans are out of default but if that's still the status officially then that's probably the issue.

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Valued Contributor

Re: FHA Loan with student loans

Yes, defaults/collections are sometimes fine, but it depends on the situation. If your husband has a repayment plan, there shouldn't be any issue getting pre-approved. It sounds like you may need to see a new lender. Do you have a realtor that you trust that could refer you to a lender?

Mortgage Loan Officer licensed in CA & AZ


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Moderator Emeritus

Re: FHA Loan with student loans


@krystalx33 wrote:

I am newly married (October 2014) and trying to buy my first home with my husband but we have come across some issues getting preapproved.  All of our credit scores are above 640, our credit card utilization is under 30%, no late payments, we have proof of adaquete savings for a down payment and we both have have high degrees working in our respected fields.  To the blind eye this seems all fine and dandy, but we can still not get approved for an FHA loan.  Why? Because of student loans.  All of my students loans are deferred until 2017 as I am continuing my education and working, but my husbands are not.  When he was continuing his education, he applied for deferral and it was denied.  Not realizing this, three of his loans went into default ($48,000 to be exact) and he currently has an agreement with a lawyer to pay what is past due monthly.  I have researched FHA loans and the guidelines state that you can still be approved despite default or collection.  Is it that the amount in default is too high?  The two mortage lenders we have worked with could not give us a straight answer on why we were denied or what we can do to make changes.  Being that we have sufficient income and created payment plans to pay off what is in default I am at a loss of what to do.   Does anyone have any additional recommendations to help us through the preapproval process?


Welcome to myFICO.

 

I removed your duplicate post because cross posting can be very confusing to other members.

 

Thanks for your understanding,

MarineViet Vet, myFICO moderator

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