Getting A VA Mortgage Approved With Student Loan Debt

September 8th, 2021

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Have student loan debt and getting a mortgage? When calculating a student loan payment on a VA loan there are various rules. These relate to what monthly payment is counted on that student loan debt.

What if documentation shows the student loan debt will be deferred at least 12 months beyond the closing date? Then no monthly payment is counted.

What if a student loan is in repayment or scheduled to begin within 12 months from the date of a VA mortgage loan closing? Then the lender must consider the anticipated monthly payment in calculating the debt-to-income ratio. A payment is established by calculating each loan at a rate of 5% of the outstanding balance divided by 12 months.

Example: A VA mortgage borrower has a $40,000 student loan balance. You’d multiple it by 5%, which equals $2,000. Then $2,000 is divided by 12 months. This equals a monthly payment of $166.67.

What if there is a loan payment reported on the credit report for a school loan that is greater than the payment calculation above? Then the lender must use the payment from the credit report.

What if there is a loan payment reported on the credit report for a school loan that is less than the payment calculation above? The mortgage lender either has to count the higher payment. Or to use the lower payment it needs to document that with a statement from the student loan servicer.

Mortgage guidelines have the ability to change at any time. Always talk to a well-reviewed mortgage loan officer. Make sure you understand the current guidelines and how they might apply to you.

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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