• Tel: (267) 521-1502
    Email: info@everesthomemortgage.com

  • Student Loans Can Hurt Your Mortgage Process

    February 9, 2016 | Blog
  • student loans

    If you are a first time, young or moderate income buyer, you must have heard about FHA loans. They have very popular since the 1930s. There are many FHA lenders online and to know whether you can still qualify for the loan with a student debt you need to find out the requirements of the lender. New rules will make it even harder for those carrying student loans to access FHA loans. If you have deferred your loan payments for more than a year, then the debt is excluded from your overall DTI ratio which is considered during the application of this mortgage.

    Lenders have become even more interested in finding out whether your debts will hinder you from paying your mortgage as required. Lenders look for different DTI ratios. If you carry a huge student loan, then you will have the opportunity to access this loan after the debt has been excluded from the DTI calculation. The new rules want such deferred loans to be included in the DTI calculation whether you have a source of income or not. If you are a first-time applicant with a huge student loan, this rule has been put in place to reduce cases where consumers take more debt than they can manage. The government has tried to make these loans more and more accessible to people who have wanted to own homes, but those who default have made matters even worse. Improving your credit score is the only way out.

    VA Mortgage loan

    Most students have depended on student loans to complete their education. However, today, they are proving to be an obstacle for most people who are through with their college. Even veterans are not exempted. They struggle with repaying their student loans too. Student loans are the main cause of bankruptcies in most situations. If you are a veteran with a huge student debt, then these new rules will make things harder for you. Improving your credit score will help you a secure loan.

    How will a student loan affect your VA loan eligibility? A huge student loan does not mean that you are automatically disqualified from applying for this loan. Since lenders will include your student loan in your DTI calculation, you have to prove to them you can pay the loan by making your monthly student loan repayments. If you are unable to pay your student loan then managing your loan will be a difficult task without any doubt. If you have defaulted or missed paying your student loan, then your chances of being eligible for this loan are lower. Lenders no longer offer VA loans to those who cannot manage to repay their student loans. The high rate of defaulters has made the home ownership process unimaginable for those with huge student debts but by improving your credit score, you can own one.

    USDA loans

    USDA mortgage program is not known by many. The USDA guarantees a mortgage loan that is given by a participating lender. Previously, those with student loans could easily qualify for this loan because the USDA separated guidelines for all student loans under repayment plans. To qualify for this loan, you must start by improving your credit score if its poor.The new rules stipulate that you have to include more than one percent of the total student loan or the agreed amount that is reflected in the credit report.

    The lender is allowed to use this as evidence to prove that you will be able to repay your loan without any difficulties. Qualifying for the USDA home loans can be hard and overwhelming. Working with a lender that completely understands its process can help you get rid of the uncertainty of home ownership. If you have a student loan, and you want to apply for a USDA home loan, you will need expert advice to make the right decision.

    Loans have helped many students around the globe for decades. However, accessing them has become even harder because of the new rules created to reduce the rate of defaulters getting loans. Improving your credit score is a sure way of qualifying for these loans. Another sure way to be eligible for these loans is to repay your student loan without failure each month.