Deferred Student Loans Now Count!

August 29th, 2010

college graduates

Deferred Student Loans Now Count! It used to be that student loans that were deferred 3 years or more did not count against you in your debt ratios. Not anymore…

Now even if your student loans are deferred for longer than 3 years, on a Conventional loan the underwriter will count the debt against you. On FHA loans they will not count the debt against you on student loans deferred for more than 3 years, but I am guessing FHA may follow the lead of the Conventional loans and they may change their policy soon too.

And there are different formulas for each loan type to calculate a monthly payment on deferred school loans. A common example would be taking the balance of the deferred school loans times 1%. For example:

$50,000 deferred school loans

$50,000 x 1% = $500/month

$500/month is what the mortgage lender may have to count against you in qualifying for a mortgage.

This is another example of the continued tightening of the underwriting guidelines. Expect to see more and more tightening, it will get worse before it gets better.

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Brian Martucci is a loan officer for Capital Bank Home Loans, a division of Capital Bank, N.A. He has been in the mortgage industry since 1986 and has served in a number of roles, including loan processor, loan officer, mortgage broker, branch manager, and vice president. Brian Martucci – NMLS# 185421. His opinions do not necessarily reflect the opinions and beliefs of Capital Bank Home Loans or Capital Bank. Capital Bank, N.A.- NMLS# 401599. Click here for the Capital Bank, N.A. “Privacy Policy”.

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