Good news for first time home buyers with student loans. The Federal Housing Administration (FHA) recently announced that it plans to make it easier for homebuyers with student debt to access FHA single-family loans. Lenders were required to calculate a borrower’s monthly student loan payments at 1 percent of the outstanding balance for loans that are not fully amortizing or are not in repayment. Beginning August 16, 2021, lenders will calculate an FHA borrower’s student debt burden for loans not in repayment as 0.5 percent of the outstanding loan balance.

Mortgage lenders want your total monthly debts, including your estimated new mortgage payments, to equal no more than 43 percent of your gross monthly income (your income before taxes are taken out). Lenders count your student-loan payments as one of your monthly debts. Changes by FHA may allow more buyers to qualify for a traditional FHA loan or a conventional mortgage loan.

If you have put off purchasing a home because of student loan debt, contact your lender or one of our agents at Right Size Realty to discuss purchasing your first home.

Rodney McCoy | 601.383.1019 | rmccoy@rightsizerealty.com
Jamie McCoy | 601.259.0461 | jmccoy@rightsizerealty.com
Andrew Tyre | 601.842.4270 | atyre@rightsizerealty.com

Paul Tyre | 601.709.9002 | ptyre@rightsizerealty.com

Allen Wilson | 601.985.9231 | awilson@rightsizerealty.com

Dianne Nelson | 601.421.7094 | dnelson@rightsizerealty.com

References:

Rafter, D. (2021). Getting an FHA mortgage with Student Loan Debt. Retrieved from: https://www.mortgageloan.com/getting-an-fha-loan-with-student-loan-debt#Debt-to-income-ratios-matter

Sanna, J. (June 21, 2021). FHA Offers Helping Hand to Buyers with Student Debt. Banker & Tradesman. Retrieved from: https://www.bankerandtradesman.com/fha-offers-helping-hand-to-buyers-with-student-debt/