If You Have Student Loan Debt You Could Now Qualify for a Higher Mortgage


New Rule changes in FHA mortgages help with qualifying for higher loan amounts:

Under the current administration, Starting July 1st the Federal Housing Administration (FHA) just made it easier for borrowers with student loan debt to qualify for a mortgage. This update, affective now, will change the way lender’s count student loan debt as a monthly liability. Easing the rules for counting student loan debt will give borrowers more opportunity to qualify for a mortgage and at a potentially higher loan amount, particularly if that loan is in forbearance or is not yet due for repayment (you still have to count the monthly debt).


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Previously under FHA rules, lenders had to calculate a borrower’s monthly student loan payment as 1% of the total outstanding loan balance for all student loans not fully amortizing over the loan term or not in repayment, including loans in forbearance or deferment.   For example, a borrower has a student loan with an outstanding balance of $100,000.  Previously, lenders would have to use 1% of $100,000, so $1,000 as the monthly student loan payment.  


With the recent FHA policy update, lenders can now calculate monthly student loan payments using 0.5% of the total outstanding loan balance instead of 1%.  In our example, the lender would not be able to use a monthly payment of $500 on a $100,000 student loan.  Updating the student loan payment calculation should make home ownership more affordable and available to borrowers. For some borrowers this may mean that they would qualify for $50-56,000 more in mortgage amount depending upon taxes, insurance & credit. 


Article Written By: Kevin Berju

American Financial Network NMLS # 137213

Looking for a Lender in Philadelphia? Contact the Philly Mortgage Team. Click below.



 

Kevin Berju starts Philly Mortgage Team with over 25 years in the mortgage industry. Prior to working with residential and commercial mortgages, Kevin graduated with a business degree from Temple University, owned his own business, and worked as an agent for years in both commercial & residential Real Estate. With Kevin’s diverse knowledge of the real estate and mortgage industries, his clients are thoroughly guided throughout their home buying or refinance process. As a result of his knowledge, attention to detail, responsiveness to his clients, and exceptional work ethic, Kevin was awarded the Five Star Mortgage Professional recognition in Philadelphia Magazine for the past successive years as well as reaching the top 1% of all originators country wide since 2012 as designated by Mortgage Executive magazine.

As a mortgage professional for over 2 decades, Kevin is an invaluable resource for both first-time and experienced home buyers. With his accomplishment of the Certified Mortgage Planning Specialist designation, Kevin is placed in an elite group of the top 5% of mortgage professionals in the industry. Looking to Purchase or Refinance in Pennsylvania, New Jersey, or Florida? Kevin Berju is the Lender for You!

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