Student Loan Debt-to-Income Ratio Updated

FEDERAL HOUSING ADMINISTRATION TAKES STEPS TO REMOVE BARRIERS TO HOMEOWNERSHIP FOR THOSE WITH STUDENT LOAN DEBT

If student loans are keeping you or someone you know from homeownership, help may have arrived.

The Federal Housing Administration (FHA) has changed the way student loan payments are counted when determining eligibility for federally insured mortgages.

The change is particularly helpful for student loan borrowers who are on an income-based repayment plan; whose loans are in an approved deferment or forbearance; or whose loans are not fully amortizing.

Previously, lenders were required to count 1% of the outstanding student loan balance toward monthly debt payments in those situations. That amount has been cut in half or even more in some cases.

WASHINGTON – The Federal Housing Administration (FHA) on Friday announced updates to its student loan monthly payment calculations to take steps to remove barriers and provide more access to affordable single-family FHA-insured mortgage financing for creditworthy individuals with student loan debt, which has a disproportionate impact on people of color. The updated policy more closely aligns FHA student loan debt calculation policies with other housing agencies, helping to streamline and simplify originations for borrowers with student loan debt obligations.

HUD’s mission is to create strong, sustainable, inclusive communities and quality affordable homes for all. More information about HUD and its programs is available at www.hud.gov.

The above information is provided by the Federal Housing Administration the following link provides more information: