Six figure student loan debt and FHA

[Anonymous]

I've read roughly a billion threads about student loan debt and mortgages, and want to make sure my info is accurate... especially around these specifics.

I have about 185k in student loans. If 1% of that is added to my DTI, I begin to push up against DTI limits (but was pre-approved). However, the pre-approval came with the assumption that I'd be dealing with a large, very old collection so the two both can't be factored in and still let me qualify for the purchase price I need.

I am going to tackle the collection since it appears the SOL actually will expire in July, and I'm not closing until November (new build). But if they won't settle, I don't really want to enter into a payment plan for a collection that will fall off my report next year. That makes the student loans more appealing to tackle.

I have seen references to using an extended repayment term to lower what's factored into DTI. Here are my specific questions:

• Do I need to actively put my loans on that program?
• Does it matter that they'll be deferred for another 1-2 years? Even if I move it to that plan, it won't actually start kicking in until then unless I begin repayment (not something I really want to do while also in school) 
• Right now, they are on one of the ICR repayment plans, but deferred - so it does seem possible to enter into a repayment plan while maintaining deferral - is this true?

And, lastly, I plan to graduate in 5/20. This would require me to take out one last year of student loans, which would entail one added to my report in August. Will this wreck a mortgage that's set to close in November? I haven't seen any dips in my credit score as new student loans are added, so I'm not overly worried about the score impact... just the loan impact. I'm willing to take a leave of absence to wait for closing if I HAVE to, but obviously don't want to delay graduation.

[JVille]

Sounds like you poked the sleeping bear? Did you actually call the people who hold the collection and try to negotiate? The collection that expires in July???

[Anonymous]

Nope! I haven’t done anything yet.

[Mortgage-Specialist]

Youre going to want to call your student loan company and ask them to show you what your payments would be at a fully amortized 25 year term (FHA will allow this.) This will typically be significantly less than 1%. Keep in mind you might not need to bother with any of this if your total debt ratio is 56.9% or less since FHA will allow your debt ratio to be that high

[Anonymous]

Is there any way you can do a IBR, IDR plan on your student loans and do a conventional (Fannie Mae) instead of FHA. They will go by your monthly amount not the 1%

[Anonymous]

That’s a HUGE relief. Even both combined wouldn’t put me that high.

My LO got back to me and told me not to do anything until my file comes out of UW and we get the conditions. She didn’t seem concerned and now that I know how high it can go, I understand why. DTI calculators were telling me it was too high with both, but they must be using lower ratios.

[newmomnewme]

I am in a similar situation. I have 280k in student loans (in school now until 12/20)...they calculated the 1% and I am still under 50% DTI ratio. Last month, my school required a credit pull for loans this semester AND they will need another one for next semester as well...its nerve wrecking. 

My mid score dropped from 639 to 625 since the inq and new loan showed up. I received my conditional approval right before they hit my report....I asked my LO about it and she said that I am good as long as I don't use the loan for down payment or closing. 

We will see. 

[Anonymous]

I'm glad I'm not the only one! I'm going to have a credit pull in August for next year's loans plus the new batch of loans, but my LO didn't seem to think that would mess anything up. Still pretty nerve-wracking... I'll definitely be interested to hear how yours goes.