Posted: 5/29/2004 9:37:10 AM EDT
| We'll be hopefully buying our first house this summer, and are getting ready to apply for a mortgage. How do student loans figure in? Just like normal debt? Other than the student loans, we have perfect credit with an pretty good debt to income ratio. Factor in the 60K student loans and we might be screwed though. |
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It really depends on several factors. You should have no problems as long as you can stay below about 45% DTI with the student loans. Some lenders will allow a higher DTI (in fact up to 50%) but you will get penalized for it. They do figure like normal debt, because it is a debt. As long as your credit is good (640 FICO or above) and you make enough money, you should'nt have any problems. |
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good luck medicmandan. We are hopefully going to do the same thing. I already talked to my bank assistant manager. Using their formula she said "on paper" I could afford a $1300 a month mortgage payment!  I must have looked like I was going into cardiac arrest cause she said.."thats on paper, not what you necessarily feel comfortable with!" |
Deferred to when? If you are not required to make payments on your student loans now, then they will not count against your DTI. How long is the term of the student loans and how long do you have before you have to start making payments? |
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Do the SL's show up on your credit report? If they do then it will be up to the underwriting guidelines of whichever lender you go with, as to whether or not they will count it as a Debt. If they do show up then it will count against your DTI, but if it is not on your report then it will not count against your DTI. While it is up to the lender whether or not they want to count it, I don't think you'll have any problems here. You should DEFINATELY try to close and fund your loan before your first SL payment date. MOST lenders are comfortable with the rule of thirds when it comes to home mortgages and DTI. Take 1/3 of what you make in a month and that is about (ballpark) what you can afford for a home mortgage. Add in the car payments, cc's, and whatever else you have and it can rise quickly. |
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We bought our first house while we were still in school with about 60k in student loans. My wife was getting ready to graduate when we bougt the home so we had the 6 month deferrment. All we had to do is show that I was still in school and wouldn't be graduating for another year. The loans will show on the credit report but there will be no payment information. I am just now getting out of the banking industry, but I wrote a lot of mortgages in the last few years and think that as long as your fico is high enough and DI is in line you should not have a problem. There are a lot of people out there that will write you a mortgage at a decent rate anyway. BFG |
same thing happened to me a few weeks ago!!! Loan guy said I was approved for $1000 a month. I can afford maybe $700, at the most! |
| Medicman, and stryker, hope you both the best in the house hunt. I have been hunting for about 3 weeks now, found one great house, but I got outbid. anyways, with all the different mortgage programs, I'd be willing to bet that your loan officer could find one that works around the student loans. not sure though. again good luck in the house hunt. |