Thanks to a change in FHA policy regarding a borrower’s student loans, more homebuyers may now be eligible for FHA loans!
When calculating a borrower’s liability, lenders were previously required to choose the greater of 1% of the student loan balance as the monthly payment, the payment listed on the borrower’s credit report, or the actual documented payment. For those with Income Driven Student Loan repayment plans, this has caused many to be ineligible for an FHA loan.
Under new guidelines, lenders may use the payment amount listed on the borrower’s credit report or 0.5 percent of the student loan balance when that payment is listed as zero. This change means borrowers with student loans who might not have qualified in the past, may now qualify for FHA loans!
While getting offers accepted with FHA financing in this current real estate market can be challenging, we should still look at re-qualifying buyers with student loans who need an FHA loan. Reach out to us or to your lender today to learn how this change may benefit you if you are in this category.
* Information is subject to change without notice. This is not an offer for extension of credit or a commitment to lend. Some restrictions may apply. The current Maricopa & Pinal County 2021 FHA loan limit is $368,000, which equates to a purchase price of $381,347 with minimum 3.5% down. Higher purchase prices can be obtained with a higher down payment.