For many people fresh out of college, qualifying for a home loan has been a struggle due to student loan debt. Before June 17, 2021, the government was requiring lenders to calculate student loan monthly repayment as either 1% of the outstanding balance or the fully amortizing mortgage payment, whichever number was greater.
The problem with using these figures is that they often don’t reflect a borrower’s true monthly payment, oftentimes by hundreds of dollars. For example, a credit report may show a borrower’s repayment is $500 a month, but in reality the borrower’s actual payment may be income based and only be $72 a month. New requirements allow lenders to use written documentation showing the actual monthly payment, including if that payment is zero due to loan forgiveness, cancellation, discharge, or otherwise paid in full, giving the borrower a higher income to debt ratio and allowing for a better chance to qualify.
This is very exciting news if you or a client recently did not qualify for a mortgage due to their debt/income ratio. To find out what you or your client can currently qualify for, or for more questions about this new program, contact Dawn Schweiker for further assistance.
Dawn Michelle Schweiker,
Dawn Schweiker is a mortgage loan broker with over 25 years of experience in the mortgage industry. She has the knowledge and experience to help guide borrowers and real estate agents to the programs that best suit their needs. As a loan broker with Premier Mortgage Partners of Florida, she has the ability to not only shop interest rates between lenders, but she also has access to over 300 mortgage programs to help borrowers with a wide array of products.