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IBR guidelines/Mortgage

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Anonymous
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IBR guidelines/Mortgage

Anyone have any recent experience with FHA loans and IBR guidelines for Student Loans? 

I am in the process of obtaining a mortgage and they want to use 1% ($800) of my total SL debt which is 80k. VS my IBR payments which are $285. I understand they want to minimize the "shock" if you suddenly have to make more payments- but the way IBR works is that you only pay more if your income increases! Sigh-- This is really killing my DTI ratio. My lender told me to get a letter from Navient stating my fully amortized payments over 25 years. Has anyone heard of them accepting this instead? 

Message 1 of 15
14 REPLIES 14
Anonymous
Not applicable

Re: IBR guidelines/Mortgage

Yes. I had to do the exact same thing. I contacted Navient, got put on a payment plan that has the lowest payments but also fully amortizes the loan over the repayment period and the lender accepted that as my payment amount based on the letter Navient provided detailing the payments. Once all is done, you can easily contact Navient and request a different payment plan at any time (the rep told me I could anyway).

Message 2 of 15
NC_Mtg_Loaner
Valued Contributor

Re: IBR guidelines/Mortgage

As long as the payment fully amortizes the loan you are ok.  Otherwise, FHA guidelines require 1% of the balance which can be a deal killer.

 

FNMA uses whatever your IBR payment is--even if it's zero.   This might be an ideal option if you can go conventional.  

 

(NOTE: Generally, if your credit score is > 680 then a (95% or 97%) conventional loan will be "cheaper" in the long run than FHA anyway)

__________________________________________________

Licensed NC Mortgage Loan Originator
Message 3 of 15
Anonymous
Not applicable

Re: IBR guidelines/Mortgage

Yea, it doesn't fully amortize my payments at all.

The 1% doesn't really kill my deal- but I have to be able to find a house for like 180K vs the 220K I was really looking for. Surprisingly though, when I searched with my new criteria- I found a lot of homes I liked. So hey.. Maybe it isn't worth the headache to change anything.

 

Last I checked I was at a mortgage middle score of about 670. Wonder should I try and raise it to go the conventional route?

Message 4 of 15
Anonymous
Not applicable

Re: IBR guidelines/Mortgage

Thanks for this info. This is what my lender suggested to do.

Message 5 of 15
Cherekas
Frequent Contributor

Re: IBR guidelines/Mortgage


@Anonymous wrote:

Anyone have any recent experience with FHA loans and IBR guidelines for Student Loans? 

I am in the process of obtaining a mortgage and they want to use 1% ($800) of my total SL debt which is 80k. VS my IBR payments which are $285. I understand they want to minimize the "shock" if you suddenly have to make more payments- but the way IBR works is that you only pay more if your income increases! Sigh-- This is really killing my DTI ratio. My lender told me to get a letter from Navient stating my fully amortized payments over 25 years. Has anyone heard of them accepting this instead? 


This is interesting information. I'm wondering how my IBR will be figured into my information as well. I will be applying for a mortgage soon and I was very nervous about this. 

Score: F8 EQ 609, EX 597, TU 614 (1/17) Current Score: F8 EQ 701, EX 714, TU 689 (12/18)

Goal Score: 700+ across all 3--Gardening until May 2019
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Total CL $96,300
Message 6 of 15
homeloanexpert
Established Contributor

Re: IBR guidelines/Mortgage

You don't necessarily have to have a 680. I've got the AUS (automated underwriting system) to approve many many loans under 680 over the years. Have your LO run it as an Conventional both DU and LP and see what they come up with.The rate will be higher, but you should be able to get the deal done. In the meantime, try bringing up your scores as a back up.  Best wishes.

Branch Manager - Specializing in FHA, VA, USDA, Conventional, Jumbo, Portfolio and Non-QM Loan Products.
Message 7 of 15
VALoanMaster
Valued Contributor

Re: IBR guidelines/Mortgage


@Anonymous wrote:

Yea, it doesn't fully amortize my payments at all.

The 1% doesn't really kill my deal- but I have to be able to find a house for like 180K vs the 220K I was really looking for. Surprisingly though, when I searched with my new criteria- I found a lot of homes I liked. So hey.. Maybe it isn't worth the headache to change anything.

 

Last I checked I was at a mortgage middle score of about 670. Wonder should I try and raise it to go the conventional route?


Hi Jadepassion19,

 

Fannie Mae has a special program that you maybe eligible for that could make it a lot easier to hit your 220K price point.

The program only requires 3% down & the private mortgage insurance is a little less than FHA.

Feel free to PM me for more info.

 

VA Mortgage Expert. Mortgage Banker lending in All 50 States.
VA, FHA, USDA. Jumbo, Conventional.
CAIVRS Expert.
Message 8 of 15
Anonymous
Not applicable

Re: IBR guidelines/Mortgage

Thank you for this information. My LO only gave me numbers based on FHA loans. I am applying for the Ga Dream program for downpayment assistance- but I believe they work with FHA or conventional. I'm going to link up with him and find out. Working on the credit score now. Not sure what else I can do to raise.... 

Message 9 of 15
Anonymous
Not applicable

Re: IBR guidelines/Mortgage

I would also mention that income based or graduated plans will not be accepted by FHA. The loan has to be a fixed payment or extended fixed payment plan that fully amortizes. To get the lowest payment, choose the extended fixed payment option if available (30 years instead of 25). This will likely be much less than the 1% per month (at least if you're like me with lots of student loan debt).

Message 10 of 15
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