FHA and IBR student loan payments

[Countrygirl]

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!

[SouthernCredit]

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

[MrBEW]

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. 

[Mortgage-Specialist]

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. 

[VALoanMaster]

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@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!

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

[Mortgage-Specialist]

Certainly