$99k in SL and buying a home

[1prettyorchid]

Hi all,

Looking to buy a home in 2.5 years. I currently have $99k in SL and not sure what to do to have the least amount of impact on buying a home. Currently making around 45k per year (single). I figured enrolling in an income based program will be my best bet but do I have to consolidate first? 

I should have no other debt by the time I'm looking to purchase. Please help!

[Anonymous]

I know debt to income ratio is an important factor. 

Im not sure if repayment payment status, other than late pays are considered. 

[ccquest]

Depends on what loans you have, if they're Direct you can easily go into an IBR plan.

No point in consolidating most of the time either, it just averages out your interest rates together and your total payment amount remains the same.

That said, each lender has their own rules for how they consider student loans and even if your IBR payment says $150 a month, there's a chance they'll measure it as $990 as that's 1% of the balance instead.

[1prettyorchid]

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@ccquest wrote: even if your IBR payment says $150 a month, there's a chance they'll measure it as $990 as that's 1% of the balance instead.

I'm really hoping this is not the case. Otherwise I would never be able to buy a home. 

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[Anonymous]

There are convitional loans that will let you use your IDR payment when determining DTI. Homeready and Home Possible are two (Both low down payment options to FHA. FHA and USDA are hard since they use 1% of your total. Look for conventional alternatives such as the ones I mentioned and it is possible. My Mom just got financed with almost 200,000 in SL's, and moderate income. 

[1prettyorchid]

I'll be just coming out of a Chapter 7. I don't want to wait 4 years for a conventional loan. Thanks for the advice though. 

[Anonymous]

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@1prettyorchid wrote:

I'll be just coming out of a Chapter 7. I don't want to wait 4 years for a conventional loan. Thanks for the advice though. 

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There are certain programs that will use your IBR monthly repayment amounts, I believe as long as it is not $0/mo. Otherwise, they generally calculate the DTI for SLs at 0.5% or 1% of the remaining balance, so essentially either roughly $500/mo or $990/mo.

I thought it was 2 years for conventional, but maybe it is 4 years post BK. Definitely look in the BK forum and the Mortgage forum.

[SweetCreditObsession]

You may want to contact a mortgage broker for guidance on this. Even though you're not ready to make a move today, they're used to clients having to take time to get to where they need to be in order to qualify.

[SOGGIE]

Some mortgage lenders will pay off the student loan and incorporate that payment into the mortgage loan. I'm not sure how beneficial that is to the borrower.

[SweetCreditObsession]

I've never had that offered or proposed. I recommend that you work with a broker to get guidance on how to proceed.